A high-level intervention between national government and Johannesburg leadership has produced an in-principle agreement to resolve the metro’s R5.2 billion electricity debt to Eskom, averting potential supply disruptions to South Africa’s economic hub.
Electricity Minister Kgosientsho Ramokgopa and Johannesburg Mayor Dada Morero concluded urgent negotiations this week, with final technical teams expected to formalize the arrangement imminently. The discussions follow a stark warning from Eskom Board Chair that the utility would reduce, interrupt, or terminate power to key bulk supply points if payment obligations remained unmet.
A Partnership Model, Not a Takeover
Central to the resolution is the Distribution Agency Agreement (DAA), a cabinet-approved framework designed to strengthen municipal electricity management through structured partnership rather than administrative takeover.
Ramokgopa clarified that the DAA addresses a systemic challenge: municipalities collectively owe Eskom over R105 billion, threatening the utility’s ability to reinvest in critical infrastructure and undermining national energy security. Under the agreement, electricity revenue collection is ring-fenced and administered through Eskom systems, providing both parties visibility into funds received.
“The municipality meets its obligations towards Eskom first,” Ramokgopa explained. “A portion is then reinvested into maintaining electricity infrastructure, and the remainder can be reallocated to other municipal functions like salaries and social services.”
Why Johannesburg Requires a Tailored Approach
The minister emphasized that Johannesburg’s economic centrality necessitates a calibrated response. “Johannesburg is too big to fail,” he stated, noting the city’s role as South Africa’s financial center. Disrupting power supply would trigger cascading economic consequences far beyond municipal boundaries.
However, accountability remains non-negotiable. Ramokgopa affirmed that Eskom’s board has fiduciary duties that cannot be overridden, and Masiye’s public emphasis on accountability aligns with those responsibilities.
Technical inefficiencies compound the financial strain. City Power experiences technical losses approaching 30%, compared to a national average of 10% and international benchmarks of 5–7%. The DAA partnership enables Eskom to deploy technical expertise to address illegal connections, improve billing accuracy, and accelerate smart meter rollout.
Smart Meters: Direct Benefits for Consumers
Beyond debt resolution, the intervention includes consumer-focused upgrades. Ramokgopa highlighted that smart meters enable prepaid functionality, allowing households to monitor usage and avoid unexpected disconnections. Crucially, they ensure free basic electricity subsidies reach qualifying indigent households directly, rather than being absorbed into general municipal budgets.
“Instead of punishing everyone when someone doesn’t pay, you are able to target the non-paying account,” Ramokgopa noted, emphasizing protection for diligent payers from collateral disruption.
Distinguishing Johannesburg from Other Municipal Interventions
When asked why Johannesburg’s approach differs from account attachments implemented in municipalities like Mafikeng or Maluti-a-Phofung, Ramokgopa cited two key developments: first, the DAA model now provides a cabinet-endorsed, structured pathway for intervention; second, Johannesburg had previously committed to the framework before payment delays emerged in December and January.
“With Johannesburg, there has been engagement and prior commitment to the agreement,” the minister said. “The DAA addresses accountability while establishing an enduring mechanism for revenue management.”
Load Reduction Timeline Reaffirmed
Ramokgopa also provided an update on efforts to eliminate load reduction practices. The Western Cape and Northern Cape have already concluded the practice. Free State, Eastern Cape, and North West remain on track for resolution by October, with Limpopo following the same timeline.
For Gauteng and KwaZulu-Natal, the minister committed to resolution by March next year, acknowledging resistance from “rent seekers” who profit from illegal connections as a complicating factor. “It’s a promise I’ve made publicly; I continue to make it; we’re going to keep to that promise,” he affirmed.
Next Steps
A three-way engagement involving the minister, mayor, and Eskom technical teams concluded with an in-principle arrangement. Finalization is expected within days, after which details of the intervention will be announced nationally.
The overarching objective remains balancing Eskom’s financial sustainability with uninterrupted service delivery, protecting compliant customers while ensuring infrastructure investment and transparent revenue management for long-term stability.