Eskom flags R94.6 billion municipal debt as greatest financial threat

By Johnathan Paoli

Eskom has disclosed that 87% of municipalities approved for the National Treasury’s Municipal Debt Relief Programme have not met its conditions, contributing to a staggering R94.6 billion debt burden.

Addressing Parliament, Eskom said that this mounting municipal debt poses a significant threat to its long-term viability, noting a decline in payment levels by municipalities.

The power utility attributed this trend to entrenched structural and systemic issues within local governments.

Eskom’s CFO, Calib Cassim, underscored the urgent need to steer Eskom towards financial self-sufficiency.

“Our concern is sustainability. We cannot continue relying on bailouts. The municipal debt issue is beyond Eskom’s capacity to solve alone. We need coordinated action from the Treasury and Cooperative Governance,” Cassim said.

The power utility revealed the alarming figures during a briefing to Parliament’s Standing Committee on Appropriations, warning that unpaid municipal bills—now at R94.6 billion—remain its greatest financial threat.

Despite National Treasury’s interventions aimed at stabilising Eskom’s finances, the culture of non-payment has only worsened.

Eskom’s General Manager for Finance, Rajen Naidoo, told MPs that municipalities face systemic challenges such as illegal connections, meter tampering, and inaccurate billing—factors that continue to undermine their ability to settle current accounts and reduce outstanding debt.

“Municipal debt is a key risk to Eskom’s business and overall liquidity. Energy losses are rampant, driven by theft and poor infrastructure. But more troubling is the lack of a functioning revenue model within many local governments,” Naidoo said.

The numbers paint a dire picture of municipal payment levels being on a steady decline, while the debt burden has become an anchor dragging Eskom’s recovery efforts.

This comes in spite of the Eskom Debt Relief Bill, which aims to alleviate the power utility’s debt and reduce its dependence on Treasury bailouts — nearly R400 billion in recent years.

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