Chairman Mteto Nyati has indicated that the billions of rand owed to Eskom Holdings by municipalities in South Africa are hindering the state-owned power utility’s efforts to overhaul and separate its distribution division.
As of November, South African municipalities were in debt to Eskom for R95.4 billion ($5.1 billion) and are facing challenges in collecting revenue from customers; in some cases, the available funds have been misallocated due to years of poor management.
Eskom successfully finalized the unbundling of its transmission division last year, representing a key achievement in its goal to restructure and create three distinct entities. The next objective is to focus on the separation of the distribution sector.
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In Eskom’s 2024 annual report, Nyati remarked, “The challenge posed by municipal debt presents a significant risk to the separation of the distribution unit and may jeopardize the financial health and sustainability of the future distribution landscape.”
The National Treasury launched a debt-relief program in 2023 to help reduce Eskom’s financial burden, but participation has been slow, and many municipalities are struggling to follow through with the necessary credit controls.
Nyati raised concerns, stating, “The board is troubled by the noncompliance with the municipal debt-relief program, particularly since the terms of the program prevent Eskom from taking action against municipalities that fail to adhere.”
In the report, Chief Financial Officer Calib Cassim indicated that Eskom has urged the National Treasury to directly engage with non-compliant municipalities to address issues related to outstanding or delayed payments.
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