Johannesburg residents could soon face major electricity interruptions after Eskom issued a formal notice to reduce power supply to the city over an unpaid debt exceeding R5.2 billion. This figure does not include a further R1 billion due on 5 June.
Eskom stated it has engaged with the City of Johannesburg for more than two years to address payment obligations, but defaults have persisted. The utility has proposed a way forward through its Distribution Agency Agreement (DAA), a long-term contract under which Eskom would assist struggling municipalities by training staff, installing smart meters, and collecting revenue on their behalf. According to Eskom, nine municipalities nationwide have already signed such agreements.
Prof. Vally Padayachee, former executive manager at both Eskom and City Power and a power and energy expert, discussed the crisis. He noted that the situation stems from a combination of systemic issues, leadership challenges, and political uncertainty in Johannesburg management, while stressing he does not speak on behalf of either entity.
Padayachee expressed disappointment that the economic hub of South Africa and the continent—Johannesburg, the country’s largest load centre—has reached this point. He warned that any interruption or termination of supply by Eskom would cause major disruption to residents’ lives and the broader economy. He emphasised that Eskom must be paid for services rendered, while acknowledging the City of Johannesburg’s complaints about billing issues.
The professor highlighted that the end-use customers—residential, industrial, and commercial—would be the biggest losers. He described the potential power cuts as an interruption of service, whether framed as load shedding (due to insufficient supply) or load reduction (for other reasons such as illegal connections). He called for serious intervention beyond Eskom and the City, involving higher levels of government, to address structural and operational deficiencies.
On revenue collection, Padayachee agreed that while the City collects funds from residents, there are questions about whether these are fully passed on to Eskom. He pointed to broader national trends, noting many municipalities have effectively become resellers of Eskom electricity. Rising bulk purchase costs from Eskom, coupled with past years of load shedding that reduced available electricity for resale, have compounded the financial strain.
He cautioned that Johannesburg’s situation could be symptomatic of challenges across the country. Collective municipal debt to Eskom currently stands at around R110 billion and could escalate to R350 billion by 2030 without intervention.
Regarding Eskom’s proposed Distribution Agency Agreement, Padayachee acknowledged its potential value but questioned its effectiveness given Johannesburg’s specific challenges. He called for urgent broader reforms, including harmonising cost-reflective tariffs for utilities with affordable tariffs for consumers to ensure viability while supporting economic growth.
Padayachee also critiqued the user-pay model for municipal services in South Africa’s context, where a large proportion of the population faces economic hardship, making it difficult for municipalities to sustain operations primarily through user payments supplemented by government grants. He noted that economic pressures, including past load shedding, have further strained communities’ ability to pay.
The developments underscore ongoing financial and operational tensions between Eskom and municipalities, with potential wide-ranging consequences for service delivery and the economy if unresolved.
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