JOHANNESBURG, Gauteng — The Johannesburg debt strategy spearheaded by Executive Mayor Dada Morero is taking shape as the municipality outlines a clear roadmap to settle its massive utility arrears. Addressing the city’s pressing financial obligations, Morero confirmed that the municipality is preparing a R960 million payment to Rand Water this month while actively negotiating the clearance of its R1.4 billion current liability to Eskom.
Tackling Utility Arrears and Tariff Challenges
The municipality’s financial recovery plan places a heavy emphasis on bringing its accounts current with major bulk suppliers. According to Mayor Morero, the city is largely on par with its water obligations and expects the R960 million injection to fully sort out the Rand Water account without major ongoing challenges.
The situation with Eskom, however, requires a more phased approach. The city currently faces a R1.4 billion liability to the power utility, alongside a staggering long-term debt estimated at R10 billion. Morero acknowledged that the municipality defaulted on a previously agreed payment schedule in January due to severe cash flow constraints. Despite this setback, the Executive Mayor expressed confidence that the city is “almost at current account” with Eskom and aims to clear the current arrears before the end of the current administrative term in November.
A significant driver of this financial strain is the structural mismatch in electricity tariffs. Morero explained that Eskom’s billing model relies heavily on peak and non-peak hours, whereas the city’s approved tariff structures do not fully reflect these peak costs. Consequently, the municipality ends up heavily subsidizing residents during peak periods. To mitigate this, the city is actively exploring alternative energy solutions to reduce bulk purchasing costs and ease the financial burden on both the municipality and its customers.
Resolving the National Treasury Funding Freeze
The push to clear utility debts is closely tied to the city’s efforts to lift a recent funding freeze imposed by the National Treasury. Johannesburg was among 69 municipalities nationwide that had their funding halted due to concerns over unfunded budgets and R22 billion in flagged irregular spending from the previous financial year.
Mayor Morero firmly pushed back against the unfunded budget claims, stating that the city has never passed such a budget. Following a comprehensive assessment of the 2026/2027 financial year and a review of the adjusted budget processes conducted between January and March, the National Treasury declared the matter closed and expressed satisfaction with the city’s financial planning.
To unlock the city’s equitable share allocation, the National Treasury required the submission of signed acknowledgment letters from both Eskom and Rand Water. Morero noted that these documents are expected to be finalized by Friday. Once received, the equitable share funds will be directly utilized to settle the outstanding unauthorized expenditures and bring the utility accounts fully current.
Furthermore, the city presented a comprehensive reduction strategy to the Cabinet at the end of June. This strategy details how the municipality intends to eliminate a four-year history of unauthorized expenditure. To ensure accountability, Morero announced that matters pertaining to financial investigations and consequence management will be tabled at the upcoming July council meeting.
Clearing Waste Collection Backlogs
Beyond financial restructuring, the municipality is working to resolve immediate service delivery disruptions. The city recently experienced a seven-day halt in waste collection services, which Morero attributed to cash flow issues and disputes involving casual laborers.
The Executive Mayor clarified that the stoppage was resolved by Tuesday evening, with operations actively working to clear the accumulated backlog. He expects the backlog to be fully cleared within three days. Addressing the labor disputes, Morero clarified that the casual workers involved are not direct employees of the City of Johannesburg. Instead, they are recruited through contracted service programs. Therefore, the city’s obligation is to pay the contractors, who are subsequently responsible for compensating the casual workers.
Strengthening Procurement and Combating Corruption
Addressing systemic concerns regarding weak procurement processes and vulnerability to graft, Mayor Morero highlighted the stringent anti-corruption measures recently implemented by the city.
He revealed that all tenders exceeding the R5 million threshold now undergo a rigorous pre-procurement review. This process involves an independent entity tasked with verifying the fairness of the bidding process and ensuring strict conformity with the municipality’s supply chain policies. While Morero candidly acknowledged that corruption remains “enemy number one” for the municipality, he expressed strong confidence that these independent pre-procurement audits are significantly reducing the impact of graft on municipal tender awards.