KEVIN MILEHAM | Eskom’s municipal debt crisis has gone from warning light to siren

There is a dangerous dishonesty at the heart of South Africa’s electricity crisis.

Millions of residents pay their municipal electricity bills every month. Businesses pay. Pensioners pay. Body corporates pay. Churches, schools, spaza shops and factories pay. They pay because electricity is not optional. It keeps the lights on, the fridge cold, the till working, the oxygen machine running and the factory floor alive.

But in too many badly governed municipalities, that money does not go where it is supposed to go. It does not reach Eskom in full. It disappears into the failing cash machinery of municipalities that have long since lost control of their finances, their infrastructure and, in some cases, their basic sense of duty to the people they serve.

That is why Eskom’s municipal debt crisis should worry every South African. Money municipalities owe Eskom now stands at more than R111bn. That is not a rounding error. It is not a technical dispute between accountants. It is not a matter that can be managed through another polite intergovernmental meeting with sandwiches and PowerPoint slides.

It’s a direct threat to Eskom’s financial stability, to electricity tariffs, to municipal service delivery and to the broader reform of South Africa’s electricity sector.

Johannesburg is now the clearest warning of what happens when this problem is allowed to fester. Eskom says the City of Johannesburg and City Power owed R5.255bn in arrears as of May, excluding a further R1.582bn current account due this month. Eskom also says it has been working with the city for more than two years, but repeated defaults have now forced it to issue notice of possible interruptions or reductions to certain bulk supply points.

Think about what that means in plain language. A resident in Johannesburg pays City Power. A business pays City Power. A block of flats pays City Power. But Eskom says it is not being paid what it is owed. The paying customer may then face the risk of supply interruptions because the money they paid for electricity has not been passed on to the supplier of that electricity. That isn’t just bad administration. It’s a betrayal.

Johannesburg’s mayor Dada Morero and electricity & energy minister Kgosientsho Ramokgopa recently announced a partnership between City Power and Eskom that will supposedly keep the lights on while servicing Joburg’s R5.2bn debt. But they have remained mum on the details. Residents and businesses should not be left in the dark while vague agreements are negotiated behind closed doors.

Electricity revenue should be treated as electricity revenue. It should be ring-fenced. It should not be raided to plug every other hole in a collapsing municipal budget. When a municipality collects money for electricity and does not pay Eskom it is in effect using residents as unwilling lenders to a broken system. And as always, the people who did the right thing are the ones placed at risk.

Eskom has tried to present the distribution agency agreement (DAA) as part of the solution. On paper, the idea is not irrational. Eskom can assist struggling municipalities with skills, metering, billing systems, revenue collection, maintenance and technical support. Many municipalities clearly need that help. Some have distribution networks that are falling apart. Others cannot bill properly, cannot collect properly, cannot maintain properly and cannot protect their own infrastructure from theft and vandalism.

But after all the announcements, the question is brutally simple: is the debt coming down? It isn’t. Eskom’s municipal arrear debt has climbed from R74.4bn in 2024 to R94.6bn in 2025, and now to more than R111bn. That’s not a turnaround. That’s a debt crisis getting worse while the government announces more processes, more agreements and more “progress”.

South Africa has become very good at announcing mechanisms. We announce task teams, compacts, agreements, frameworks and interventions. We hold consultations. We issue statements. We speak about progress. But too often, the thing being announced is not the thing being fixed. The DAA programme is in danger of becoming exactly that: another well-named mechanism that allows government to claim movement while the underlying problem grows worse.

The municipal debt crisis will not be solved by pretending that every defaulting municipality is merely a struggling partner in need of gentle support. Some municipalities are struggling because they lack capacity, being filled with deployed cadres. Others are failing because they are badly governed. Some have treated electricity revenue as a convenient cash pool. Others have tolerated illegal connections, poor credit control, political interference and nonpayment for years.

There must be a point at which support becomes enforcement. There must be a point at which repeat default has consequences. There must be a point at which residents are told the truth about where their money went. This isn’t only about Eskom’s balance sheet. It goes to the heart of electricity reform.

South Africa can bring new generation onto the grid. It can expand transmission. It can design a competitive electricity market. It can speak about wheeling, trading and private investment. But if the distribution layer remains broken, financially hollowed out and politically protected, reform will keep hitting the same wall.

The distribution crisis is where electricity policy meets lived reality. It is the prepaid meter that does not work. The substation that burns because it has not been maintained. The illegal connection that overloads a network. The municipality that collects money from one customer while refusing to confront another. The bill paid in good faith that never reaches Eskom.

That is why the response must now become much more serious. Electricity revenue collected by municipalities must be ring-fenced and paid for electricity before it is used for anything else. Municipalities entering DAAs must be required to publish monthly data on billing, collections, payments to Eskom, arrears movement, technical losses, non-technical losses, meter replacement and credit-control actions.

No more hiding behind aggregate figures. No more vague assurances. No more “engagements are ongoing” while the debt rises. The National Treasury’s debt relief programme must also stop functioning like a soft landing for repeated failure. Write-offs must be earned through payment discipline, revenue reform and measurable improvement. They must not become political protection for municipalities that continue to behave as if Eskom is a voluntary creditor.

And where municipal leaders collect electricity revenue but fail to pay Eskom, there must be consequence management. Not another workshop. Not another memo. Consequence management. The principle should be obvious: if residents have paid for electricity, that money must be used to pay for electricity.

If the government cannot enforce that, the DAA programme is not a solution. It is a holding pattern. And South Africans will keep paying for municipal failure through higher tariffs, collapsing infrastructure and the constant threat that the lights may go out because the money vanished before it reached Eskom.

Municipal debt is no longer a warning light on the dashboard. It’s a siren. Dr Ramokgopa needs to stop explaining it, stop managing the optics, and start fixing it.

• Mileham is a DA MP and spokesperson on electricity and energy.