Eskom faces R358 billion in debt by 2031 because municipalities don’t pay their bills

Minister of Electricity and Energy, Kgosientsho Ramokgopa, said that Eskom faces R358 billion in debt by 2031 because municipalities don’t pay their bills.

He shared this information in response to a Parliamentary question from National Assembly member Nompumelelo Mhlongo.

Mhlongo asked Ramokgopa about the money currently owed to Eskom by South African municipalities.

She also asked him how many municipalities are subject to formal debt-recovery and intervention processes.

Ramokgopa responded, saying that as at 31 July 2026, total overdue municipal debt amounted to R120.26 billion.

He added that municipal debt remains the greatest threat to Eskom’s financial sustainability and has to be addressed.

Eskom projected the municipal debt to rise to R358 billion by the 2031 financial year if decisive intervention is not implemented.

Eskom reported that the non-payment of municipal, metro, and residential accounts continued to constrain its financial performance.

In the 2026 financial year, A net amount of R15.8 billion, which is 4.5% of revenue, has not been recognised as revenue due to the elevated risk of non-collectability.

Ramokgopa added that 83 municipalities are subject to Eskom’s formal debt-recovery processes.

“Of these, 71 participate in the National Treasury’s Municipal Debt Relief Programme,” he said in a statement.

The programme has achieved limited success, with only 10 of the 71 participating municipalities fully complying with the National Treasury’s key conditions.

Measures to improve payment performance and contain debt growth

Eskom is implementing measures to improve municipal payment performance, address revenue-collection shortfalls, and limit further debt accumulation.

• Distribution Agency Agreements (DAAs): Eskom partners with defaulting municipalities through Distribution Agency Agreements to strengthen electricity operations, improve operational efficiency, and enhance revenue collection.

• National Treasury collaboration: Eskom continues to work with the National Treasury to support municipalities, including through the Municipal Debt Relief Programme.

• Targeted concessions and interventions: Eskom has granted concessions and implemented targeted interventions to assist municipalities to address payment challenges, including extended payment terms, the ring-fencing of debt with interest suppression and reversals, and the write-off of debt subject to compliance with the National Treasury’s Debt Relief Programme.

• Credit management and intergovernmental processes: Eskom applies credit management processes, engages through intergovernmental relations structures, and offers payment arrangements. These measures have contributed to improved payment performance among metropolitan municipalities and certain other municipalities.

• Notified Maximum Demand management: Eskom manages the Notified Maximum Demand of defaulting municipalities to help reduce their electricity bills.

• Legal and supply-related interventions: Where necessary, Eskom considers legal action, limits supply to a level that aligns with the municipality’s affordability, or disconnects supply as a last resort.

The success of these programs varies, but it is not enough to stem the rapidly growing municipal debt.