The City of Johannesburg has settled its outstanding R5.25 billion electricity debt to Eskom in full, bringing an end to a months-long standoff that threatened to disrupt power supplies to parts of South Africa’s economic hub.
Eskom confirmed on Friday that it had received the final payment from the City and City Power, reducing the overdue amount to zero. The settlement also brings to an end the utility’s legal process aimed at recovering the outstanding money.
The Department of Electricity and Energy and the City of Johannesburg confirmed the payment, which resolves a long-running dispute over electricity arrears and billing between the municipality, City Power and Eskom.
Eskom said it had also withdrawn the Promotion of Administrative Justice Act process it began in May over the outstanding debt.
Threat of electricity interruptions
The debt dispute had escalated dramatically in May when Eskom warned that it could reduce, interrupt or terminate electricity supplies to certain bulk supply points serving Johannesburg.
At the time, Eskom said the City and City Power owed more than R5.25 billion in arrears, while a further R1.58 billion current account payment was also due.
The utility said it had been working with the municipality for more than two years to help it meet its payment obligations, but repeated defaults had forced it to consider stronger action.
Eskom previously described the situation as unacceptable, arguing that the municipality was collecting electricity revenue from residents and businesses but failing to transfer Eskom’s share.
The threat raised fears that large parts of Johannesburg could face serious electricity disruptions, with businesses, households and critical infrastructure potentially affected.
Ramokgopa warned of economic consequences
Electricity and Energy Minister Kgosientsho Ramokgopa had become directly involved in efforts to resolve the dispute, warning that cutting electricity to Johannesburg would have consequences far beyond the city.
“We are invested in the resolution of this problem because this is too big to fail,” Ramokgopa said during the height of the crisis.
He warned that switching off Johannesburg would undermine the ability of the South African economy to function, given the city’s importance as the country’s economic and financial hub.
In a separate interview, Ramokgopa described Johannesburg as the “epicentre of South Africa’s economy and the financial hub” of the country and continent.
He also stressed that the city’s economic importance did not exempt it from its financial obligations.
“But that doesn’t absolve Joburg from its obligations to pay,” Ramokgopa said, adding that the city had to comply with its agreements with Eskom.
A long-running financial crisis
The latest settlement follows years of financial pressure at the City of Johannesburg and difficulties at City Power, including concerns around revenue collection, billing accuracy, electricity losses and payments to bulk electricity supplier Eskom.
Earlier this year, the electricity dispute became a major concern after Eskom warned that continued non-payment could result in interruptions to electricity supplies.
The Organisation Undoing Tax Abuse had also warned that Johannesburg residents and businesses should not become “collateral damage” in the dispute.
Outa executive manager Julius Kleynhans said Eskom should pursue the debt without punishing customers who had paid their bills.
The government subsequently pushed for interventions aimed not only at resolving the immediate debt crisis but also at improving City Power’s financial and operational performance.
Among the measures discussed were the deployment of Eskom engineers and technicians within City Power, improved billing systems and efforts to reduce technical and non-technical electricity losses.
Eskom had already received billions
The settlement comes after a significant payment made by Johannesburg last month.
On July 24, Eskom confirmed that the City had paid R4.3 billion towards its electricity debt while the utility continued reviewing representations received from residents and other affected stakeholders during its PAJA consultation process.
The latest payment therefore closes the remaining balance, with Eskom confirming that the full overdue amount has now been settled.
The final figure reported by the City and government was R5,255,421,994.16.
Power supply threat now lifted
With the arrears settled, the immediate threat of Eskom reducing or interrupting electricity supplies to Johannesburg has been removed.
The resolution is particularly significant for businesses operating in the city’s commercial and industrial centres, as well as residents who had faced uncertainty over whether the dispute could result in large-scale electricity interruptions.
Reuters reported that the settlement followed a government-led mediation process and averted the risk of electricity supplies being throttled to Johannesburg.
The challenge now shifts from settling the historic debt to ensuring that the City and City Power remain up to date with their ongoing electricity bills.
For Johannesburg, the payment provides short-term relief from one of its biggest financial and service-delivery threats. But the broader issues around revenue collection, electricity losses, billing and municipal financial management remain critical if the city is to prevent another Eskom debt crisis from developing.
