By Simon Nare
Eskom’s municipal debt has more than doubled in three years to R122 billion at the end of August 2026, despite years of interventions to help municipalities settle their outstanding bills.
The utility told the Standing Committee on Appropriations on Tuesday that concessions, interest suppression, payment arrangements and the National Treasury’s municipal debt relief programme had failed to reverse the trend.
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“But despite these and various other initiatives, the debt growth continues to outpace the reduction initiatives. The principal driver of debt growth is declining municipal payment performance,” Eskom said in its presentation.
“Our debt relief programme has not, unfortunately, delivered the desired outcomes. Despite the National Treasury municipal debt relief programme, the municipal debt continues to grow.”
Of the 71 municipalities approved for debt relief by National Treasury, only nine remained fully compliant, while 58 were non-compliant.
Eskom estimated that about R55 billion, just under half of the outstanding debt, could potentially have been written off had all the municipalities complied with the programme’s conditions.
However, only R5 billion of the potential R55 billion has been written off to date, the utility said, highlighting the need for stronger accountability and more decisive interventions.
“Eskom does not have a collection challenge, but a structural problem when it comes to municipal debt and in particular non-metro municipal debt,” the presentation said.
Municipal payment levels have declined from about 93.7% at the end of the 2020-21 financial year to just above 88%, while payments by non-municipal customers have remained consistently above 99% over the same period.
The outstanding municipal debt comprises R100 billion in principal and R22 billion in interest, Eskom said.
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Debt owed by metropolitan municipalities remained stable at R12.5 billion, while debt owed by non-metro municipalities continued to increase despite efforts to address the problem.
Eskom said all four defaulting metros — Johannesburg, Ekurhuleni, Mangaung and Tshwane — had payment plans in place, helping to slow the growth of their debt.
Tshwane, Ekurhuleni and Johannesburg have payment arrangements, while Mangaung, which is participating in National Treasury’s Municipal Debt Relief Programme, has concluded a four-year payment arrangement for overdue debt.
The utility said its working arrangements with the metros had helped stabilise current-account payments and establish more predictable repayment plans.
Eskom’s recovery strategy will focus on preventing further municipal defaults, strengthening cross-credit management and pursuing legal interventions, including limiting service provision where necessary.
Distribution agency agreements (DAAs) remain the utility’s preferred mechanism for working with municipalities to improve revenue collection and payment performance.
“Implementation, however, is slow, requires a council resolution and also implementation of the teams in which the work has to be done to be able to bring about the changes that we need to see,” Eskom said.
The utility said it had three active DAAs, which required additional expenditure because Eskom had to allocate resources within the municipalities concerned.
Eskom said it was critical to ensure that municipalities paid their current accounts and adhered to repayment plans, while working with other government structures to reduce historical debt.
The utility also did not rule out issuing notices under the Promotion of Administrative Justice Act in cases where all other efforts to resolve the situation had been exhausted.
Eskom said it would need government support to strengthen interventions aimed at ring-fencing electricity revenue and enforcing compliance with the Municipal Finance Management Act and electricity licensing requirements.
