Electricity minister warns of total electricity complex collapse in South Africa

Electricity and energy minister Kgosientsho Ramokgopa says municipalities with a combined debt of over R100 billion with Eskom have made little progress in reducing the amounts they owe.

According to the minister, the ongoing problem will result in the total collapse of the South African electricity complex.

Speaking at a media briefing on Tuesday, 24 June 2025, the minister described Eskom’s challenge of supplying electricity but being unable to collect revenue as an “existential problem”.

“They are spending money they must collect from the bulk consumer, and where they are reticulating. They are finding it difficult to collect, so they’re unable to reinvest back into their asset base,” he said.

“It’s going to result in, if not managed, a total collapse of the electricity complex in the country.”

Municipal debt owed to Eskom had grown to R109 billion by February 2025, and despite the introduction of a debt relief programme in 2023, it continues to worsen.

The debt relief programme allowed municipalities to write off part of their debt, provided they committed to strict conditions to ensure sustainability and accountability.

To qualify for the programme, municipalities had to apply and meet specific conditions for approval.

The conditions for debt relief from the National Treasury included:

• They must stay on track with their current account payments.
• They must roll out smart meters to improve the efficiency of their electricity distribution networks.
• They must remove illegal connections on their networks.

However, things didn’t start well, with Ramokgopa revealing in August 2023 that just 11 of 28 approved municipalities had honoured their commitments.

He added that seven had only partially honoured the agreement.

In July 2024, the minister revealed that municipal debt had grown to R78 billion and warned that, if left unaddressed, the trend would result in municipal debt rising to R3.1 trillion by 2050.

“It’s important that we have engagement with municipalities. They owe Eskom over R78 billion,” Ramokgopa stated.

“If the current trend line continues, the collections and payments we are seeing now, if you extrapolate it to 2050, it’s about R3.1 trillion. This is huge.”

The municipal debt owed to Eskom makes it difficult for the utility to invest in its infrastructure, forcing it to apply for higher annual electricity price increases.

Energy watchdog backs South Africans who pay for electricity

The National Energy Regulator of South Africa (Nersa) rejected Eskom’s arrears debt application for the 2025/26, 2026/27, and 2027/28 financial years.

The power utility’s arrears debt application amounted to R8.9 billion in 2025/26, R9.9 billion in 2026/27, and R10.8 billion in 2027/28.

It had hoped to recoup some of its arrears debt from municipal and non-municipal customers through electricity tariff increases.

This would effectively mean that law-abiding customers would pay more to help Eskom recover the costs of electricity used by those who steal it.

Nersa approved arrears debt amounts of R0 for all three financial years.

“Nersa considered different scenarios in the determination of arrear debt, and each scenario includes all economic and social issues, as well as input by stakeholders,” the regulator said.

The scenarios considered included allowing the applied-for arrears debt, which Nersa said would have a significant impact on the broader economy.

“For Eskom, allowing arrear debt can provide short-term relief by enabling it to collect more revenue and assist in the municipal debt crisis,” said Nersa.

“However, it would mean high electricity prices for South African residents.”

One of its other considerations was capping Eskom’s applied-for arrears debt, which the regulator said would provide a balanced approach to debt management.

“Provision for arrear debt is an accounting concept that assists organisations in anticipating and preparing for potential losses,” it said.

“Allowing a cap on arrear debt may assist Eskom in fostering a more manageable and equitable financial environment in debt recovery.”

In this scenario, it is noted that paying customers wouldn’t be burdened by Eskom’s failure to collect revenue.

However, the regulator adopted its second scenario: disallowing Eskom’s applied-for arrears debt.

“This will result in a more controlled financial environment for Eskom,” said Nersa.

“This will further allow municipalities to focus on paying off existing debt by working with Eskom and the government, rather than creating new debt.”

It added that, by disallowing arrears debt, paying customers won’t be burdened by Eskom’s failure to recover revenue.