Eskom, City Power reach R3. 2 billion deal to avoid Joburg power cuts
The agreement comes months after Eskom threatened to disconnect Johannesburg residents over a disputed R4.9 billion debt, sparking public outrage and fears of widespread blackouts
Eskom and City Power have reached a R3.2 billion settlement agreement aimed at resolving long-standing billing disputes and safeguarding Johannesburg's electricity supply, Electricity Minister Kgosientsho Ramokgopa announced on Tuesday.
The agreement comes months after Eskom threatened to disconnect Johannesburg residents over a disputed R4.9 billion debt, sparking public outrage and fears of widespread blackouts. The new deal appears to have averted that crisis, at least for now.
Under the terms of the settlement, City Power will pay Eskom R3.2 billion over four years, but only outside of the high-demand winter period to avoid putting additional pressure on the grid and consumers. Ramokgopa also revealed that R830 million in interest charges have been written off as part of the agreement.
'This deal allows us to stabilise electricity supply to Johannesburg while acknowledging historical financial inefficiencies,' said Ramokgopa. 'It's a significant step forward in cleaning up our electricity system.'
The billing dispute between Eskom and City Power dates back several years, with mismatches between bulk electricity purchases and the amounts billed. Johannesburg residents have long complained of incorrect electricity billing and erratic service delivery. Experts have also pointed to the city's poor revenue collection practices as a major factor contributing to the growing municipal debt.
Joburg Mayor Dada Morero welcomed the agreement, calling it a 'fair settlement' that would protect consumers from disruptions.
'Residents will not be affected during the settlement period,' Morero said. 'This has always been a dispute between two entities — not the people of Johannesburg. We are ensuring continuity of service while resolving a complex financial disagreement.'
City Power, a municipal-owned utility, distributes electricity in parts of Johannesburg but remains reliant on Eskom for supply. The power utility has faced increasing pressure in recent years over infrastructure failures, load shedding, and mounting unpaid bills.
The agreement is being seen as a lifeline for both entities: for Eskom, it brings in much-needed revenue; for City Power, it avoids the political and logistical nightmare of Eskom cutting power to one of South Africa's biggest cities.
While the deal offers short-term relief, analysts warn that it does not solve the underlying issues of mismanagement, billing errors, and financial instability that have plagued municipal electricity supply in the country.
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