Electricity minister Kgosientsho Ramokgopa said he had stepped into negotiations between Eskom and City Power and they had been unable to "find each other". (Waldo Swiegers/Bloomberg via Getty Images)
Eskom will not stop supplying electricity to the City of Johannesburg despite threatening to do so because of unpaid debt and a steep current account, Electricity Minister Kgosientsho Ramokgopa has said.
The discord between the national power utility and City Power had escalated and brought about “significant amounts of unease” to residents and businesses, Ramokgopa said at a media briefing on Monday.
“At the heart of this dispute is City Power, and by extension the City of Johannesburg, which is aggrieved about the accuracy of [Eskom’s billing].”
On Friday, Eskom said it had served a notice of intention to suspend supply to the city because of City Power’s R4.9 billion arrears account. The city’s current account stood at R1.4 billion, Eskom said, and that was payable at the end of November.
In a strongly-worded rebuke on the same day, the city issued a statement saying that it was in a dispute with the national power utility for overbilling of more than R3.4 billion.
Ramokgopa said the current dispute centred on an October 2023 bill. “[City Power and COJ said that] until this matter is rectified, we are going to offset that which we think you owe us against the billing, and therefore we will pay you the difference.”
But he party that was billed — City Power — had an obligation to pay, he said.
Ramokgopa said he had stepped into the ongoing negotiations because Eskom and City Power had not been able to “find each other”. It was decided not to restart the negotiating process, he added.
A “point of failure” in the negotiations had been identified, he said, in that an independent technical assessment was needed to reconcile and confirm the billing from Eskom, and City Power’s claims.
“Independent in this instance would mean someone who doesn’t have a current association with either party,” he said.
There were state institutions that had the necessary capacity to do an assessment, which is why it was agreed that the South African National Energy Development Institute would take on the role, along with “someone who is technically competent”.
That person would be supported by two people each from Eskom and City Power.
The assessment was expected within the next 14 days. It was hoped that a “much more enduring solution” would be found after that, he said.
Ramokgopa also said that the “challenges” being experienced in the city were emblematic of those faced in all municipalities across South Africa.
“We have seen that the municipalities are finding it increasingly difficult to meet their obligations as a result of a revenue base that is contracting, partly because of the underperformance of the economy.
“It is also as a result of the haemorrhaging of skills at the local government level, the inability for us to ensure that there’s completeness of billing, inability to ensure that there’s accurate billing, and ineffective credit control measures.
“All of these things have resulted in municipalities’ revenue base contracting.”
Using an example of how quickly municipal debt accumulated, he said that during one of his regular performance updates about the country’s grid earlier in the year, municipalities cumulatively owed Eskom about R78 billion. Three months later, that amount had increased to R90 billion.
“Essentially, we are seeing an average increase of debt of about R3 billion a month.”
Ramokgopa said he accepted that the tariff dispensation during the winter period was higher than the other periods of the year. “So this might not be an accurate reflection of what the trend line is, but the point I’m making is that the trend line is on the up and just on the account of the past three months that debt … is sitting now at R90 billion.”
If Johannesburg failed, South Africa’s economy would fail, he said.
Johannesburg mayor Dada Morero said at the briefing that there had been ongoing disputes with Eskom, but this was not related to cash flow “as the city has committed to pay Eskom”. Rather, there was a problem meeting payment deadlines.
There would be a “one week or two week delay depending on the cash flow position of the city,” he said.
City Power chief executive Tshifularo Mashava said there had been “challenges” since 2019 with Eskom’s billing. She said past billing disputes had been corrected, but the current dispute had to be subjected to “a process” so that Eskom and the municipal entity could “find each other”.