Eskom’s R358bn municipal debt bomb threatens turnaround

Eskom, the power utility, has warned that municipal debt could reach R358 billion by 2031 unless drastic action is taken. The utility has recently improved its financial position, becoming profitable for the second consecutive year in 2026, with profits rising to R30.3 billion. However, Eskom continues to struggle with collecting payments from municipalities and other customers.

Municipal debt increased by 17.9% to R111.6 billion by March 2026 and further to around R119 billion by June. If unpaid municipal accounts persist, Eskom's debt could reach R358 billion by the 2031 financial year. Eskom's Minister for Electricity and Energy, Kgosientsho Ramokgopa, has expressed concern over the growing municipal debt, which rises by approximately R3 billion each month.

Despite efforts to alleviate the burden through reduced interest rates and structured payment plans, Eskom warns that non-compliance poses a serious risk to its liquidity and operational sustainability. Ramokgopa stated that Eskom's debt from municipalities is increasing on average by R3 billion monthly, and by the end of the year, the utility will be owed an additional R36 billion.

The minister also highlighted that electricity in the country has become unaffordable, and the government is reviewing the price policing policy. He emphasized that new dimensions of energy poverty are emerging, with low-income households forced to choose between purchasing bread or paying for electricity.