Eskom has warned that mounting municipal debt threatens its financial sustainability, as unpaid municipal accounts continue rising despite the utility’s return to profitability and improved balance sheet.
Image: SIGCINIWE
Power utility Eskom has warned that municipal debt could surge to as much as R358 billion by 2031 without decisive intervention.
The utility has seemingly turned a corner in recent years, bringing an end to persistent load shedding while returning to profitability and strengthening its balance sheet.
It announced on Monday that it had recorded a second consecutive profitable year, with group profit after tax rising to R30.3 billion for the year ended March 2026, from R14 billion in the previous year.
However, despite the improved financial position, Eskom continues to face significant challenges in collecting money owed to it by municipalities and other customers.
The utility said municipal debt had increased by 17.9% to R111.6 billion at the end of March 2026, before rising further to about R119 billion by June.
Eskom warned that the continued accumulation of unpaid municipal accounts could place increasing pressure on its financial sustainability, with the debt projected to reach as much as R358 billion by the 2031 financial year if decisive intervention is not implemented.
IOL also previously reported that Electricity and Energy Minister Kgosientsho Ramokgopa has also sounded the alarm over the rising municipal debt owed to Eskom, warning that it is increasing by approximately R3 billion every month.
This is despite efforts by Eskom to ease the burden through measures such as reduced interest rates and structured payment plans. The utility has warned that persistent non-compliance poses a serious risk to its liquidity and overall operational sustainability.
“We know that the debt of municipalities to Eskom is growing on average R3 billion per month,” he said. “By the end of this year, compared to the beginning, Eskom will be owed an additional R36 billion. There is only so much Eskom can absorb,” Ramokgopa said.
The minister also mentioned that electricity in the country was becoming excessively expensive and added that the government was reviewing the price policing policy.
"Electricity is unaffordable; we can't continue along this tariff path. We are getting to a situation in the country where we see new dimensions of energy poverty. There are households today as I speak to you who will not be able to afford the cost of electricity, so poor households have to make choices between a loaf of bread or prepaid units," the Minister added.
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