The City of Johannesburg will establish ring-fenced electricity revenue accounts and implement infrastructure and revenue management reforms under an Eskom-backed intervention plan aimed at addressing City Power’s R5,2 billion arrear debt and stabilising electricity distribution operations.
The intervention follows Eskom’s recent notice of intention to interrupt electricity supply to certain Johannesburg bulk supply points.
Speaking during a media briefing at City Power’s Johannesburg headquarters on May 26, Minister of Electricity and Energy Kgosientsho Ramokgopa said the parties will continue implementing the agreement reached last year rather than negotiating a new arrangement.
He said Eskom and the city will move away from what he described as an arm’s length relationship towards a more interventionist model aimed at improving City Power’s operational and financial performance.
“Johannesburg is too big to fail,” Ramokgopa said. “It is quite significant to the national economy.”
The intervention will include measures to improve revenue management, refurbish infrastructure and establish ring-fenced electricity revenue accounts by July this year.
Ramokgopa said electricity-related revenue streams will be ring-fenced to strengthen financial sustainability and support infrastructure investment planning.
Details of the arrangement between Eskom, the City of Johannesburg and City Power are expected to be finalised and announced publicly by the end of next week.
Cabinet has approved the use of a distribution agency agreement (DAA) framework to support the intervention, Ramokgopa added.
Responding to a question from Energize on the implications for grid expansion and electricity sector reform, Ramokgopa warned that escalating municipal debt is placing pressure on Eskom’s liquidity and limiting its ability to modernise and expand electricity infrastructure.
He said municipal debt to Eskom now exceeds R110 billion nationally, adding that unresolved arrears undermine investment in transmission and distribution infrastructure.
According to Johannesburg Executive Mayor Dada Morero, City Power’s losses currently stand at about 29%, driven by technical and non-technical losses, including illegal connections, bypassed meters and ageing infrastructure.
“We’ve always been on the smart meter programme,” Morero told Energize. “We are consistently rolling out smart meters and, whatever income we are able to get, we then implement the rollout of smart meters to help us reduce the cost of meter readings and improve billing accuracy.”
Ramokgopa said the DAA model is intended to support municipalities rather than take over their distribution licences.
He said the intervention aims to restore financially and technically sustainable electricity operations over a defined support period.
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