Eskom Chief Executive, Dan Marokane says the power utility cannot complete its long-delayed unbundling until municipalities settle the massive arrears owed to the company.
Marokane made the disclosure during the Bloomberg Africa Business Summit in Johannesburg.
He noted that the municipal arrears of about R100 billion ($5.8 billion) remain the biggest barrier to carving out the distribution business.
“The unbundling of the distribution business will not happen unless we can solve the municipal debt,” Eskom’s CEO stated
South African President, Cyril Ramaphosa announced plans to split Eskom Holdings SOC Ltd. into generation, transmission and distribution businesses in February 2019.
According to him, the aim is to help them raise funding and improve the management of their debt and costs. The plan has hit multiple delays.
The government is now stepping in to help Eskom recover the overdue debt.
Mounting debt slows Eskom’s recovery
Recently, Eskom recorded its first profit in eight years, stabilised the grid and improved plant performance after years of breakdowns.
However, Chief Financial Officer Calib Cassim warned that municipal debt, which grows by roughly R20 billion annually, could wipe out the gains made under the government’s debt-relief programme.
Eskom aims to reduce its net debt to R300 billion by June 2026, from about R370 billion.
The utility also faces growing revenue losses. In the current financial year, Eskom cannot recognise R8.9 billion in revenue because several municipalities lack the capacity to raise or repay the amounts owed.
This is up from R6.3 billion in 2023 and is expected to double by the end of 2025.
Capacity gap and delayed projects
According to Eskom, about 8GW of capacity from coal plants scheduled to retire before 2030 must be replaced.
The utility plans to rely heavily on private developers for clean-energy and storage projects. Private power projects are already outpacing capacity procured through government programmes.
A planned 3,000MW gas-to-power plant in Richards Bay is also behind schedule.
The Supreme Court of Appeal set aside the project’s environmental authorisation in September due to inadequate public consultation with Eskom reapplying for approval.
Eskom expects a pipeline of 13GW of private generation to come online by 2029 as grid access expands
What you should know
Eskom reported that outstanding municipal debt reached R70 billion in 2023, citing non-payment by municipalities, weak revenue collection, and ongoing financial challenges at the local level.
By March 2025, these community debts had increased by 27% to R94.6 billion, placing further pressure on Eskom’s cash flow and its ability to fund maintenance and new capacity.
The Standing Committee on Public Accounts (SCOPA) reiterated its concern in February 2025, backing Eskom and the national government’s plan to enforce stricter recovery measures.
