South Africa’s electricity landscape may soon breathe easier after Johannesburg electricity distributor, City Power, and national utility Eskom finally reached an agreement over a long-standing billing and debt dispute worth billions of rands.
At a press conference held on Tuesday, Dr Kgosientsho Ramokgopa, the Minister of Electricity and Energy, revealed that City Power has committed to pay R3.2 billion to Eskom over the next four years. In return, Eskom will write off R830 million in penalties, interest, and load-shedding related disputes.
The long-running conflict between the two entities had raised concern, especially considering Eskom’s ongoing financial difficulties and the continued challenge of load shedding. The power utility had previously accused City Power of underpaying and not settling amounts owed for bulk electricity supply, while City Power had disputed the billing structure and winter penalties imposed.
“We’ve acknowledged the challenges around winter tariffs. These time-of-use charges become heavy during winter, and households, industries, and small businesses find it hard to keep up,” Minister Ramokgopa said.
He explained that in reaching the new agreement, the government acknowledged the unsustainable costs during winter months, leading to Eskom offering relief.
Among the key elements of the deal:
City Power will pay R3.2 billion over four years, starting this financial year.
R830 million in interest, penalties and charges—including those related to exceeding notifiable maximum demand (NMD) and estimated load shedding charges—have been scrapped.
No additional interest will be charged on the remaining balance.
Ramokgopa noted that Eskom also admitted to estimation errors during periods of load shedding, which further inflated City Power’s bills. These errors were factored into the final relief agreement.
“This R830 million concession is significant. Eskom recognised that some of the penalties were unjustified, and we’ve reached a point of mutual understanding,” he said.
The minister also described the resolution as a potential blueprint for similar challenges facing other municipalities across the country. He cited Tshwane as another city with similar issues and hinted at upcoming talks with more struggling local governments.
“We’re encouraged by the approach. Eskom is not expected to absorb losses endlessly. They must recover money to fund operations and reinvest in infrastructure. But we must also accept that municipalities are struggling and need structured relief,” he said.
Eskom, South Africa’s embattled power supplier, has long been weighed down by municipal debts running into tens of billions of rands. The entity needs consistent revenue to invest in power generation, especially as it attempts to stabilise the grid and reduce blackouts.
Municipalities, on the other hand, face increasing pressure from ratepayers and small businesses, many of whom are battling economic hardship. The impact of load shedding, rising tariffs, and service delivery protests has made it difficult for local governments to maintain reliable collections.
The City Power-Eskom deal is being viewed by energy analysts as a breakthrough that could help pave the way for further reforms in electricity billing and tariff negotiation models, particularly around time-of-use charges during peak seasons.
The Minister also called on other municipalities to proactively engage with Eskom, rather than wait until debt becomes unmanageable.
“Let this serve as an example. Where there is goodwill, understanding, and accountability, we can solve even the most complex issues,” he said.
