The immediate crisis may have passed, but Johannesburg's underlying governance challenges have not - OUTA.
Image: Timothy Bernard | Independent Newspapers
The immediate threat of electricity supply interruptions to parts of Johannesburg has been removed after the City settled R5.25 billion in overdue debt to Eskom, but questions remain over how the payment was funded and whether the underlying problem has been fixed.
The Organisation Undoing Tax Abuse (OUTA) welcomed Eskom’s withdrawal of a process under the Promotion of Administrative Justice Act (PAJA) that could have resulted in electricity supply being reduced, interrupted or terminated at certain bulk supply points.
Eskom confirmed on 21 August that it had received the final payment settling the City of Johannesburg and City Power’s accumulated overdue debt of R5.255 billion in full.
“This is a positive development for Johannesburg's residents and businesses. However, we remain concerned about City Power’s ability to address its challenges while the revenue it generates from electricity is not ring-fenced and instead flows into the City’s central treasury,” said OUTA executive manager Julius Kleynhans.
Kleynhans said, “We believe Eskom’s intervention could improve electricity services in the short term, until greater stability is achieved.”
While the settlement has removed the immediate risk to electricity supplies, OUTA said it should not bring scrutiny of the City's finances to an end.
“Residents deserve to know how this payment was funded, whether it affects the City's ability to deliver other essential services, what agreement was reached between Eskom and the City, and whether there is now a sustainable plan to ensure electricity revenue is properly managed going forward,” Kleynhans said.
Eskom said when announcing the settlement that Johannesburg had also committed to paying its R1.86 billion July electricity account, due on August 31, and all future accounts by their respective due dates.
The settlement followed months of pressure over Johannesburg's electricity account.
In May, Eskom said the City and City Power owed R5.255 billion in arrears, excluding a further R1.582 billion current account, and initiated the PAJA process after what it described as repeated payment defaults.
By June, despite R1.2 billion having been paid since the notice was issued, Eskom said total arrears stood at R5.281 billion as another current account had gone unpaid. This included R2.579 billion outstanding under an existing settlement arrangement that had been made an order of court.
When settling the bill, Executive Mayor of the City of Johannesburg, Dada Morero, said “this is a significant milestone in the City's journey towards financial sustainability and responsible governance.”
Morero added that “settling the R5.25 billion overdue debt demonstrates our commitment to honouring our obligations while protecting Johannesburg's residents and businesses from disruptions to electricity supply.”
OUTA said the latest settlement was made possible through improved municipal revenue collection, implementation of National Treasury's debt relief programme and the City's own financial interventions, according to Eskom.
However, it wants greater disclosure about the settlement and its implications for Johannesburg's finances.
The questions come as Johannesburg battles a much wider revenue collection problem.
The Centre for Development and Enterprise (CDE) has said unpaid customer bills owed to Johannesburg had climbed from about R15 billion in 2014/15 to nearly R72 billion in 2024/25.
At the same time, the City's unpaid debts to suppliers had risen above R28 billion by June 2025.
CDE described Johannesburg as being caught in a municipal “doom loop”, where deteriorating services weaken payment levels, leaving less money for maintenance and investment and causing services to deteriorate further.
Electricity is an important part of that financial pressure. CDE said electricity's contribution to municipal revenue had fallen from 34% in 2014/15 to 28% in 2024/25, while electricity losses accounted for about 30% of the power bought by the City.
OUTA executive director Advocate Stefanie Fick said settling Eskom's debt could not become part of a recurring pattern. “Municipalities cannot be allowed to fall into a cycle where debt accumulates until a crisis forces intervention,” she said.
“Effective governance requires ongoing financial discipline, transparent revenue management and early regulatory intervention before residents and businesses are placed at risk,” said Fick.
OUTA said it would continue monitoring the City's payments and implementation of any agreement reached with Eskom. “The immediate crisis may have passed, but Johannesburg's underlying governance challenges have not,” Fick said.
“Residents deserve confidence that electricity revenue will be properly managed, infrastructure will be maintained, and the city will not find itself back in the same position a year from now.”
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