Municipal Debt to Eskom Tops R110 Billion, Projected to Hit R358 Billion by 2031

• Electricity and Energy Minister Kgosientsho Ramokgopa flagged a rapidly growing municipal debt crisis threatening Eskom's financial stability
• Municipal debt to Eskom has already surpassed R110 billion in 2026, with projections pointing to a far more alarming figure within five years
• Ramokgopa warned the debt poses a direct threat to South Africa's broader electricity market reform agenda

SOUTH AFRICA — Even as the country moves beyond years of crippling load shedding, Eskom is confronting a new financial crisis: a rapidly escalating debt owed by municipalities across South Africa. This is despite Eskom doubling its annual profit for the second year.

According to eNCA, Electricity and Energy Minister Kgosientsho Ramokgopa confirmed at a press briefing that municipal debt to the power utility surpassed R110 billion in 2026 and, if left unaddressed, is projected to balloon to R358 billion by 2031. Ramokgopa acknowledged that government interventions to stabilise South Africa's electricity grid had delivered meaningful results. He noted that Eskom fought load shedding and has always been confident about resolving it, adding that electricity generation now exceeds current national demand.

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However, the improved supply picture has not resolved the structural problems on the distribution side of the market. Many municipalities holding electricity distribution licences are struggling to collect payments from their own customers, leaving them unable to meet obligations to Eskom.

The minister confirmed that Eskom is once again being compelled to intervene in the electricity distribution sector as a direct consequence of the mounting arrears.

Reform agenda under threat

Ramokgopa issued a stark warning about what the debt crisis could mean for South Africa's broader electricity sector reforms. He pointed out that the debt crisis threatened the South African electricity market and the reform agenda.

The City of Johannesburg has taken steps to address its portion of the crisis, having previously settled a R5.25 billion debt owed to Eskom. However, the scale of the overall municipal arrears suggests that isolated settlements are unlikely to be sufficient without a more coordinated national response.

The dual challenge facing South Africa's electricity sector — sustaining the gains made against load shedding while preventing a municipal debt collapse from destabilising Eskom's finances — is set to remain a central concern for the government as it pursues its energy market reform programme.

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View the Department of Energy's post about the briefing on Facebook:

Eskom board chair tenure extended

In a related article, Briefly News reported on Mteto Nyati’s three-year extension as Eskom board chairperson, which will keep him in the role until 2029. Cabinet approved the continuation ahead of his current term’s expiry in October.

The decision comes as Eskom manages ongoing operational reforms and pressure to resolve South Africa’s energy challenges. Despite reporting a R30.3 billion annual profit, the utility still faces R111.6 billion in municipal debt and concerns over governance and financial sustainability.

Source: Briefly News