Full Breakdown
Johannesburg’s R5.3 bn Eskom Debt Raises Risk of Power Cuts and Hinders Electricity Reform
6/23/2026, 12:35:33 PM
Debt Standoff and Legal Process
Johannesburg owes Eskom roughly R5.3 billion for electricity supplied to City Power. After missing a payment deadline on 5 June, Eskom resumed the Promotion of Administrative Justice Act (PAJA) process that can lead to supply disconnection. A 30-day reprieve, brokered by Energy Minister Kgosientsho Ramokgopa, temporarily halted the process, but Eskom has indicated it will proceed now that the deadline was missed.
Financial Context and Governance Challenges
The metro is technically insolvent; revenue collection falls short of budgeted targets and employee-related costs, bulk electricity purchases, inventory and operational expenses exceed the budget by about R3.9 bn. In April, GCR Ratings moved the city’s outlook to “rating watch negative.” Johannesburg also faces an infrastructure backlog exceeding R200 bn and ongoing water crises.
Key Stakeholders
- Busisiwe Mavuso, CEO, Business Leadership South Africa (BLSA)
- Eskom, national utility
- City Power, Johannesburg’s electricity distributor
- Kgosientsho Ramokgopa, Minister of Electricity and Energy
- Cyril Ramaphosa, President of South Africa
- Jacob Mamabolo, Gauteng MEC for Co-operative Governance and Traditional Affairs
- Daphne Mokwena, Eskom spokesperson (unavailable for comment)
Chronology of Recent Developments
- 5 June 2026 – Johannesburg misses agreed payment deadline.
- Early June 2026 – Minister Ramokgopa secures a 30-day PAJA reprieve.
- Late June 2026 – Eskom announces resumption of PAJA process.
- April 2026 – GCR Ratings places Johannesburg on rating-watch-negative.
- June 2026 – Presidential task team’s deadline for transmission unbundling extended to end of June.
- Week of 23 June 2026 – BLSA council convenes to discuss municipal debt resolution.
Financial Figures
- Municipal debt to Eskom: R5.3 bn (largest of all municipalities).
- Payments made since PAJA began: R1.2 bn.
- Over-expenditure on salaries and operations: R3.9 bn.
- Municipalities collectively owe Eskom >R111 bn.
- Johannesburg contributes ?16 % of national GDP and ?40 % of Gauteng’s economic activity.
Official Statements and Responses
BLSA CEO Busisiwe Mavuso described the debt as a “symptom of mismanagement” and said its resolution is essential for Eskom’s balance sheet and the broader electricity reform agenda. Minister Ramokgopa facilitated the temporary legal pause. President Ramaphosa, during a 2025 oversight visit, called Johannesburg’s challenges “enormous, ranging from financial and governance instability to rapidly deteriorating infrastructure.” MEC Mamabolo ruled out placing the city under administration, citing ongoing remedial efforts. The Presidency confirmed that the forthcoming transmission entity will own grid assets, aligning with President Ramaphosa’s earlier commitments.
Criticism of Municipal Management
Mavuso’s analysis indicates Johannesburg pays suppliers on average nearly a year late, struggles to collect forecast revenues, and allocates insufficient funds for infrastructure maintenance and expansion. She characterizes the city’s fiscal approach as “consistently unable to collect the revenue it forecasts” and “spending far too little on maintaining its infrastructure.”
Conflicting Reports and Information Gaps
Eskom’s spokesperson could not be reached for comment, and City Power has not responded to inquiries. The precise timeline for any potential supply restriction remains unspecified.
Verbatim Quotes
- “South Africa cannot afford for Johannesburg to fail, and the city’s electricity supply is now genuinely at risk,” — Busisiwe Mavuso, BLSA CEO
- “An operator that runs the grid but does not own it is like asking a competitor in a race to also act as the umpire,” — Busisiwe Mavuso, BLSA CEO
- “The city has consistently been unable to collect the revenue it forecasts in its own budgets,” — Busisiwe Mavuso, BLSA CEO
- “enormous challenges, ranging from financial and governance instability to rapidly deteriorating infrastructure” — President Cyril Ramaphosa
- “In her view, ownership is fundamental to ensuring a fair and transparent electricity market where all participants can compete on equal terms.” — Busisiwe Mavuso, BLSA CEO
Implications for Economy and Reform
A supply cut would affect Johannesburg’s contribution to national GDP and could destabilize Eskom’s financial recovery, jeopardizing the transition to a competitive electricity market. The debt dispute also underscores the urgency of establishing an independent transmission system operator that owns grid assets, a prerequisite for attracting investment and achieving sector reform.
Upcoming Steps
The BLSA council will meet this week to explore debt-resolution options. The presidential task team is expected to deliver transmission-unbundling recommendations by the end of June. Gauteng’s MEC may revisit the administration option if the city’s fiscal position does not improve, while Eskom prepares to enforce the PAJA process if payments remain unsettled.
