Johannesburg and Pretoria facing new “load-shedding” threat

Two of South Africa’s largest municipalities have recently been threatened with power cutoffs by Eskom for failing to pay billions of rand in electricity bills.

The developments have caused great uncertainty among millions of residents and businesses, who are concerned about what could effectively be a return to load-shedding at a municipal level.

Eskom recently announced the City of Tshwane (CoT) had signed a payment plan to settle nearly R6.7 billion in arrears debt it owed to the power utility.

Eskom had repeatedly threatened to cut off the metro since August 2022 before taking it to court over the debt to try and force it to pay or be allowed to intermittently terminate supply.

However, the power utility and city met before the matter was heard and signed a payment plan under which Tshwane will be able to pay off the debt in smaller amounts over five years.

This first payment of R400 million is due in December 2024, with the last payment scheduled for March 2029.

It is unclear from where the city will draw this money, as its financial commitments are already stretched thin.

Former Tshwane mayor Cilliers Brink, the leader of the DA caucus in the city, recently said the ballooning debt was caused by bad decisions over the years that caused cashflow crisis.

“It requires that Tshwane continues with improving its collections, including reducing the extent of its debtors’ book, and that means more unpopular policies,” Cilliers told BizNews.

Cilliers said if the ANC-led coalition does not continue with campaigns like Tshwane Ya Tima, the DA-initiated project to cut off customers defaulting on their electricity and water bills, it will not be able to pay Eskom in accordance with the agreement.

Eskom has said if the municipality defaulted on the plan or its current account, the agreement would be terminated, and the full amount owed would become due and payable immediately.

“If Tshwane does not stick to its side of the deal, Eskom can go to court and get a judgment, whereas before they struggled to do so because you have to do all sort of intergovernmental processes.”

“It’s a good deal; it’s what we would have signed off on. However, it will require great financial discipline or it will blow up in the city’s face.

Electricity minister forced to intervene in Johannesburg

Eskom is also embroiled in a fight with the City of Johannesburg (CoJ) over a disputed outstanding bill of R4.9 billion.

The debt has resulted in a back-and-forth war of press releases and other public statements between the two entities.

The city claims that Eskom has overcharged to the tune of R3.4 billion in historical bills, which the power utility said was an unsubstantiated allegation.

The standoff culminated in the power utility publishing a notice of potential power interruption against the city and its power distributor, City Power, on 7 November 2024.

Eskom said it had exhausted several avenues to accommodate Johannesurg, which could have reached a point where it could no longer afford the metro, adding to the utility’s financial strain and harming its business.

“In terms of the Constitution and the Intergovernmental Relations Framework, the CoJ is supposed to cooperate and assist Eskom with fulfilling its mandate of ensuring that citizens have access to affordable electricity,” said Eskom.

“The CoJ has breached these obligations by not paying Eskom for the bulk electricity it supplies, making it almost impossible for Eskom to fulfil its mandate.”

However, electricity minister Kgosientsho Ramokgopa quickly intervened and, four days later, announced the appointment of an independent expert to investigate Johannesburg’s allegation that R3.4 billion of the debt was due to Eskom’s overbilling.

The report with the findings from this probe was originally supposed to be completed by 25 November 2024 but was extended to 6 December 2024.

As part of the temporary “ceasefire” between Eskom and Johannesburg, the city agreed to pay R1.4 billion for its outstanding September 2024 debt “immediately.”

However, this amount was withheld until Eskom suspended the notice of potential power interruption.

Even though the utility did so, the city only paid R1.3 billion of the first R1.4 billion bill.

It was supposed to pay another R1.3 billion on its October 2024 electricity bill by Friday, 29 November 2024, which also did not happen.

The city and its power distributor have committed to making the payment by 6 December 2024.

Electricity theft puts municipalities between a rock and a hard place

Although they are among Eskom’s biggest debtors, Johannesburg and Tshwane are just two of dozens of municipalities that owe the utility billions of rand for unpaid electricity bills.

The big problem is that many of these municipalities suffer from high levels of illegal connections.

Impact Meter Services senior manager Johan Hopley recently told Rapport that Tshwane collected just 60% of monthly electricity charges billed to customers.

That means the city must get the money to pay for the electricity supplied by Eskom from elsewhere.

That is a tall order, considering electricity revenues are among the main income streams for municipalities.

Municipal distributors are responsible for acting against electricity thieves, but many are poorly governed or simply lack the resources or financial means to do so.

Both Johannesburg and Tshwane have been implementing localised load reductions in lower-income areas prone to illegal connections to avoid overloading distribution infrastructure.

However, even customers in affluent neighbourhoods have been caught bypassing their meters to steal power.

Eskom itself is not unfamiliar with electricity theft and has also implemented load reduction in some of its directly-supplied areas.

It recently revealed it had a “rolling average” of 2.1 million direct prepaid electricity customers who were “zero buyers” — its euphemism for electricity thieves.

The utility has estimated these customers are costing it about R2.5 billion in revenue every month, nearly double Johannesburg’s monthly electricity bill.