While there is still no clarity on exactly how Johannesburg is going to pay its massive R5.2 billion debt to Eskom, the City council last week approved a R3.8 billion German loan which will be used to fund infrastructure.

The loan was voted on at a special council meeting on Tuesday morning, 26 May. 

As for the R5.2 billion owed to Eskom, Electricity Minister Kgosientsho Ramokgopa and executive mayor Dada Morero yesterday said there was a partnership agreement in place and details of this partnership will be released by the end of next week.

The R5.2 billion owed to Eskom is only a fifth of all the City’s outstanding debts. In a scathing letter to Morero, Finance Minister Enoch Godongwana said the City owed its creditors R25.2 billion, while only having cash and cash equivalents of R3.9 billion in hand. He warned that the City’s budget was unfunded and that it was in severe financial distress.

Earlier this month Eskom released a statement saying that the City of Johannesburg and City Power currently owed more than R5.2 billion in arrears, excluding a further R1.5 billion current account payment due in early June.

“It simply cannot be acceptable to the City’s residents and all South Africans that the City of Johannesburg and City Power are collecting electricity revenue but failing to pay over Eskom’s share,” said Eskom.

Eskom said it had spent more than two years engaging with the CoJ in an effort to resolve the growing debt, but repeated failures to meet payment obligations had now forced it to take stronger action. Last year Eskom and City Power reached a R3.2 billion settlement agreement aimed at resolving long-standing billing disputes and safeguarding Johannesburg’s electricity supply.

The agreement came months after Eskom threatened to disconnect Johannesburg residents over a disputed R4.9 billion debt, sparking public outrage and fears of widespread blackouts.

By May 2026, City Power’s arrears had climbed back up to R5.26 billion.  Another R1.58-billion is due in June 2026. That brings the total due to R6.84-billion. City Power buys between R1.2-billion and R2.4-billion worth of electricity a month from Eskom, depending on the time of year.

An indication of why it is failing to pay its bills lies in City Power’s financial reports. Since its 2019 financial year, City Power has bought more units of electricity from Eskom than it sold on to its customers, losing at least 42% of what it has bought. On top of that, City Power has experienced a drop in revenue collection because of a culture of non-payment, billing failures and illegal connections, according to Johannesburg’s draft Integrated Development Plan for 2025/26.

The entity also has a R19 billion overdraft, an issue board chairman Makhosini Kharodi flagged early this year, warning that if not addressed, these problems threatened the sustainability of the entity.

ALSO READ: Eskom threatens power cuts to Johannesburg over outstanding R5.2 billion debt

Last week Ramokgopa said a package of interventions must be applied, including the ring-fencing of City Power’s revenue so that it can meet its responsibilities. The ring-fencing issue, which also affects Johannesburg Water, means that some of the money City Power collects in revenue will stay in the entity’s account and not be used to pay for other City bills.

“We have agreed on broad principles to avoid a catastrophe …we are tied at the hip to resolve this problem. If we get Johannesburg right, we can get any municipality right,” Ramokgopa said after the meeting with City officials.

Acting City Power CEO Charles Tlouane and city manager Dr Floyd Brink will lead the partnership discussions for the City, while Eskom is yet to announce who will lead its delegation.

“We are on track with the partnership and it will achieve the desired results. Work is starting immediately and I am confident we will resolve all the issues,” Morero said.

On Wednesday the City’s 2026/27 budget will be presented to the council. It has already raised eyebrows for the proposed massive salary increases for officials. 

• This story was produced by Our City News, a non-profit newsroom that serves the people of Johannesburg.

ALSO READ: Joburg mayor to face parliament over water crisis, missing billions