Eskom launches legal action over R1-billion City Power debt

Eskom has launched legal action against City Power over its outstanding debt of nearly R1.1 billion, the state-owned power utility announced on Monday evening.
It said it had no choice but to apply to the Johannesburg High Court for a declaratory order forcing City Power to pay what it owes Eskom.
The case is set to be heard on 4 June 2024.
“The power utility started to default on its payments from October 2023 and no payment was received for the March 2024 invoice,” Eskom said.
“The debt owed by City Power has reached unprecedented levels, exacerbating Eskom’s already strained financial situation.”
It added that the situation threatens its financial stability and its ability to maintain critical infrastructure, invest in new technologies, and meet Johannesburg’s growing electricity demands.
In an attempt to defend its debt, City Power declared a dispute against Eskom for allegedly overbilling the municipal power utility on bulk purchases dating back to 2021.
“Eskom denies the claims made by City Power and will prove its position through the arbitration process,” Eskom said.
“In terms of the electricity supply agreements sanctioned by the Electricity Regulation Act of 2006, if a municipality raises a dispute with Eskom, it must still pay.”
Municipal debt presents a major threat to Eskom’s already dire financial situation. It has already called out the City of Tshwane for failing to pay its energy bills on several occasions.
Most recently, in October 2023, the state-owned power utility revealed that the City of Tshwane and the City of Ekurhuleni owed the power utility a combined R4.7 billion, with the former holding a significantly higher portion of the debt.
“The erratic payments by the CoT [City of Tshwane] dating back to 2022 are alarming; also of serious concern is the entrenched practice by the CoE [City of Ekurhuleni] of settling its account late over the past six months,” it said.
“Despite all the avenues that Eskom has explored to recover what is due to the organisation, both municipalities have failed to fully honour their payments and to comply with their electricity supply agreements.”
The state-owned power utility described the payment patterns of the municipalities as having “deteriorated to concerning levels”.