Months after South Africa’s load-shedding pressures finally began to ease, its richest city, Johannesburg, is confronting a new, localised electricity crisis, but this time, instead of a failing national grid, the City is facing severe fiscal insolvency.
Last month, Eskom announced that the City of Joburg (CoJ) owed the power utility an outstanding R5.2 billion, not including a current account amount of R1.5 billion, and warned of possible electricity supply interruptions to the city. This follows Eskom’s High Court application last year over growing concerns about the CoJ’s “persistent non-compliance” with its financial obligations and historic debts. Yet, despite an agreed settlement arrangement, Eskom confirmed in May that the CoJ and City Power have since repeatedly failed to comply with the High Court order.
Johannesburg Executive Mayor Dada Morero speaks to protesters demonstrating against water restrictions in Johannesburg on February 11, 2026. Photo by ILARIA FINIZIO / AFP
In a statement released in mid-June, Eskom indicated that the CoJ and City Power remained in significant arrears. It noted that despite making a partial payment of R1.2 billion towards CoJ electricity accounts, its current account of R1.5 billion, which was due on 05 June, had not been settled, bringing its outstanding balance close to R5.3 billion as of 11 June 2026. This outstanding amount includes both the overdue account and the remaining balance of the settlement agreement made by an order of the High Court.
It clarified that though partial payments were made, City Power still failed to meet its obligations and, as a result, the PAJA consultation process remains ongoing, with the deadline for public input extended to July. For context, PAJA (Promotion of Administrative Justice Act) is a mandatory consultation process that requires state entities to give the public a fair chance to object before it takes administrative action, like electricity supply interruptions, that impact them.
This escalating crisis the CoJ faces in relation to its municipal utility reveals deep structural incapacities within the metro despite ministerial interventions and recovery strategies. As a result, these persistent financial and operational constraints should not be misconstrued as temporary fiscal challenges but rather as symptoms of deeper, more chronic governance failures. In essence, the breakdown does not lie with the utility alone but with an ineffective municipal utility model that is fundamentally incapable of managing the City’s fiscal demands and operational pressures.
The latest escalation between Eskom and City Power comes amid growing scrutiny of the CoJ’s deteriorating financial position. In April, Finance Minister Enoch Godongwana highlighted and warned Mayor Dada Morero about the City’s fiscal instability, noting the municipality’s creditors balance stood at a massive R25.2 billion against the insufficient R3.9 million it held in cash and cash equivalents. Godongwana made it clear that the city was in a deep financial crisis and further warned that National Treasury would consider withholding an R8 billion equitable share grant allocation if the City did not resolve its serious financial governance failures.
Promising money it does not have
One of the major concerns raised by the Finance Minister was that the CoJ consistently fails to meet its budgeted revenue targets while understating expenditure, resulting in financially unfunded and unsustainable budgeting and spending patterns. Specifically, he noted that despite the city contributing close to 17% of the country’s GDP, Johannesburg’s revenue collection remains well below the National Treasury’s benchmark. Godongwana revealed that the City’s debt to creditors surged by over R8 billion between 2022/23 and 2024/25, from R17 billion to R25.2 billion, indicating growing reliance on debt to sustain operations and insufficient cash balances to cover these ballooning liabilities.
In addition to poor revenue collection and rising debt, the City also faces significant utility purchase and distribution losses across its major utilities: failing to collect revenue on half of the bulk water it purchases, while also losing a third of its bulk electricity purchases. In the 2023/24 Auditor-General of South Africa (AGSA) findings, City Power recorded R4.9 billion in electricity losses caused predominantly through widespread illegal connections, damaged and bypassed meters, technical transmission losses, and billing system failures. These institutional weaknesses leave City Power responsible for the payment of bulk power it purchased to residents, but now cannot convert into revenue, further weakening its ability to service its debt sustainably.
The City’s structural vulnerabilities are further exacerbated by increasing wasteful expenditure. In the 2024/25 financial year, the CoJ recorded losses of nearly R3.7 billion from irregular spending, nearly R2.4 billion from unauthorised expenditure, and R943 million from fruitless and wasteful expenditure.
This massive spike from the previous year’s R322 million stems heavily from avoidable interest charges, late supplier payment penalties, and weak internal control mechanisms. For some perspective, the combined losses of roughly R7 billion in mismanaged funds exceed the arrears owed by City Power to Eskom. This internal fiscal bleeding proves that the metro’s cash constraints are not solely driven by unpaid customer accounts but are deeply compounded by institutional inefficiency and weak financial oversight.
The problem with “one pot”
On the surface, Johannesburg’s electricity crisis reads as a debt dispute between City Power and Eskom. However, a deeper issue is that the CoJ does not govern the utility as a financially credible utility with protected revenue and enforceable fiscal responsibilities. This reflects a deeper failure that undermines the municipality’s financial governance model as a whole. When utility revenue is not strictly ring-fenced, the revenue collected from paying customers that is meant to pay its bulk suppliers, maintain networks and fund long-term infrastructure is instead pooled into a single pot of funds that are absorbed into the city’s wider and immediate financial pressures. In other words, utility revenue is treated as City of Johannesburg cash, while utility losses, backlogs, and debt continue to grow.
The result is a vicious cycle in which weak revenue collection and protection lead to underinvestment and debt, underinvestment and debt compromise the metro’s ability to deliver services, which worsens service failure, further eroding payment compliance and public trust.
A domino effect
Worryingly, trends across the City’s other bulk utilities reveal that the CoJ’s fiscal constraints are not limited to City Power but rather are impacting the wider city. The R5.28 City Power bill outstanding only reflects one-fifth of the city’s broader debt sheet. Rand Water, the City of Johannesburg’s bulk water supplier, has reported similar financial strain, with the CoJ owing nearly R3.1 billion in arrears. These patterns point to a deeper problem in that the City is operating a service-delivery model in which residents and businesses increasingly pay more, while the revenue collected is not reliably allocated to the services they are meant to sustain.
Taken together, Johannesburg faces a major utility finance management crisis rooted in weak revenue collection, poor spending and budget controls, and crippling operational losses. These pressures are worsened by unrealistic budgeting, declining cash reserves, and rising wasteful expenditure. Despite proposed interventions, including placing the city under financial administration, the CoJ has yet to provide a clear way forward and is seemingly relying on the assumption that Eskom will not follow through on cuts given the broader economic consequences.
Yet, Eskom maintains it will press on with power cuts. Meaning that without urgent reform of its municipal utilities into functioning, ring-fenced, professionally governed entities that are accountable for measurable outcomes, the continent’s richest hub faces an imminent structural collapse.
This article first appeared in Business Day.
Mischka Moosa is a researcher and data journalist in the Natural Resource Governance and Climate Change programme at Good Governance Africa (GGA). She holds a Bachelor of Social Science (Honours) in Political Science from the University of Cape Town (UCT). Her focus is on advancing justice, sustainable development, and transformative governance across the African continent, with particular interest in the intersections of environmental policy, resource management, and social development.
