Minister of Electricity and Energy Kgosientsho Ramokgopa has warned that municipal debt to Eskom could balloon to R358 billion by 2031 if urgent action is not taken. Municipalities currently owe the utility R120.26 billion in overdue debt, with 83 municipalities subject to Eskom’s formal debt-recovery processes. This debt poses a major threat to Eskom’s financial sustainability.
Finance Minister Enoch Godongwana has revealed that 50 of 71 municipalities participating in the Municipal Debt Relief Programme have failed to pay their current accounts to Eskom as at last month. The affected municipalities owed the power utility a combined R40.5 billion, a combination of debt incurred from the time they were part of the Municipal Debt Relief Programme that was introduced in 2023.
Ramokgopa said municipal debt remained the single greatest threat to Eskom’s financial sustainability. Eskom projects the debt to rise to R358 billion by Financial Year (FY) 2031 if decisive intervention is not implemented. He added that Eskom had implemented several measures to improve payment by municipalities, strengthen revenue collection and prevent further debt from accumulating.
These measures include Distribution Agency Agreements, payment arrangements, targeted debt concessions and closer collaboration with National Treasury through the Municipal Debt Relief Programme. Eskom further reported in its FY2026 results issued on Monday, 31 August 2026, that the non-payment of municipal, metro and residential accounts continued to constrain its financial performance.
A net amount of R15.8 billion, around 4.5% of revenue, was not recognised as revenue due to the elevated risk of non-collectability. In FY2025, this amount was R11.9 billion. Eskom said only 10 of the 71 municipalities enrolled in the Municipal Debt Relief Programme were fully complying with the requirement to settle their current accounts in full each month.
The utility has also entered into Distribution Agency Agreements with some defaulting municipalities, allowing it to manage billing and revenue collection while providing technical support to strengthen municipal electricity operations. This aims to improve the financial sustainability of both Eskom and the municipalities.
Eskom’s financial performance is under pressure due to the non-payment of municipal accounts. The utility’s profit after tax more than doubled to R30.3 billion in the year ended March 2026, despite a 6.2% fall in electricity sales. However, the municipal debt crisis threatens Eskom’s turnaround.
Key points
- Municipal debt owed to Eskom may rise to R358 billion by 2031.
- 83 municipalities are subject to Eskom’s formal debt-recovery processes.
- Only 10 of 71 municipalities in the Municipal Debt Relief Programme are fully complying with payment requirements.
