South African electricity utility Eskom is running a public consultation on its plan to interrupt electricity supply to around 14 municipalities due to ongoing debts.
Figures from the company say municipal debt has surpassed ZAR 110 billion ($6.6 billion) across South Africa, despite a municipal debt relief program from the National Treasury that supports municipalities with their Eskom debt providing they meet a series of conditions.
A statement from the utility says the involved municipalities, which have not been disclosed publicly, have either not settled their accounts for at least the last 18 months, have not met the conditions of the debt relief program or pose a significant financial risk to Eskom.
Eskom confirms it has exhausted all reasonable avenues through the Intergovernmental Relations Framework Act and is now in process of issuing notices in terms of the Promotion of Administrative Justice Act to the affected parties.
“Should the municipalities fail to take corrective action, Eskom will proceed with credit control measures, which may include interrupting electricity supply at predetermined times, as permitted by law,” the utility’s announcement says. “If defaults persist, Eskom will be compelled to limit supply to levels commensurate with payments received.”
Agnes Mlambo, Eskom’s Acting Group Executive for Distribution, said the company must address rising arrear debt to “protect the operational stability we have restored and the financial discipline we have rebuilt in the first three years of our turnaround”.
Chris Ahlfeldt, energy specialist at Blue Horizon Energy Consulting Services, told pv magazine the public consultation may create pressure for payment but adds that interruptions do not solve underlying governance, billing and distribution system weaknesses that caused the debt to build up in the first place.
“Municipal debt to Eskom continues to grow greater than 16% per year since the treasury began its debt-relief program in 2023, suggesting more structure reforms are needed for many municipalities,” Ahlfeldt explained. “Example reforms include stronger revenue ring-fencing, greater account transparency, and in some cases new operating models where distribution functions are managed by entities with the technical and financial capacity to keep the system sustainable.”
Ahlfeldt expects that in the near-term, supply cuts and rising tariffs will increase demand for solar-plus-battery back-up solutions for municipal customers that can afford it, which he added suggested the need for more inclusive and low-cost financing to align with energy transition goals.
South Africa is aiming to expand its generation capacity by 44 GW by 2030, a target that includes over 14 GW of solar. “If the municipal distribution interface remains financially unstable, the broader electricity market will continue to face payment risk, weak governance and uneven service delivery,” Ahlfeldt also warned.
South Africa has likely exceeded 10 GW of cumulative solar capacity, according to analysis from the South African Photovoltaic Industry Association, after deploying 1.6 GW last year.
Last August, Eskom unveiled a renewable energy offtake program inviting large consumers to sign power purchase agreements at sites owned by the utility. The scheme kicked off with a 291 MW solar tender.
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