Eskom’s financial recovery is running into a problem outside its power stations. Municipalities owed the utility R120.26 billion in overdue debt as of 31 July 2026, up from R111.6 billion at the end of March. Electricity and Energy Minister Kgosientsho Ramokgopa has warned that the debt could rise to R358 billion by the 2031 financial year if decisive intervention is not implemented.
The scale matters because Eskom has recently returned to profitability, supported by improved plant performance, cost controls and higher electricity tariffs. But the utility did not recognise R15.8 billion in FY2026 revenue because of the elevated risk that money owed by municipal, metropolitan and residential customers would not be collected. Eskom said its earnings could have been roughly R15 billion higher if that revenue had been collected.
The problem is not simply that municipalities owe money. It is that many are continuing to accumulate new debt while already receiving assistance to deal with old arrears. Eskom has 83 municipalities in formal debt-recovery processes, with 71 participating in National Treasury’s Municipal Debt Relief Programme. Yet only 10 of those 71 municipalities are fully complying with the programme’s requirement to pay their current Eskom accounts in full and on time. Fifty municipalities have reportedly failed to meet that condition, accumulating about R40.5 billion in additional debt while under the programme.
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That has pushed the response beyond restructuring and debt relief. Treasury and Eskom are increasingly using enforcement measures, including withholding government grants from municipalities that fail to meet their obligations and requiring some municipalities to enter distribution agency agreements that would give Eskom greater control over billing and revenue collection. Johannesburg provides one example of what stronger intervention can achieve: the city settled its R5.3 billion Eskom arrears in August 2026.
The financial risk is becoming harder to separate from Eskom’s broader recovery. The utility’s projected R358 billion in municipal arrears by 2031 would be roughly the same scale as Eskom’s existing gross debt of about R356–360 billion. That means the challenge is no longer simply generating enough electricity or improving power-station performance. Eskom also needs the electricity already sold through municipalities to translate into cash, or its operational recovery could continue to be undermined by a growing hole on the revenue side.
