If Eskom loses one of its more reliable paying customers, it risks growing debt problems as more defaulting municipalities remain.
The Midvaal municipality in Gauteng is in the process of dumping Eskom in favour of a private company to outsource its power supply and move away from the parastatal.
The decision comes as the National Energy Regulator of South Africa (Nersa) conducts public hearings on Eskom’s application for another electricity tariff hike for next year.
Midvaal plans to implement a 20-year public-private partnership (PPP) for electricity procurement.
Good governance
Midvaal is known for its good governance and is repeatedly singled out by Ratings Afrika for its financial sustainability.
According to the South African Independent Power Producers Association (SAIPPA), the route Midvaal is taking is the only way to solve the power crisis at municipal level, according to City Press.
Reginald Hubbard, Midvaal’s member of the mayoral committee for engineering services, told Rapport that the municipality’s outdated infrastructure was among the factors considered in the decision to involve a private partner.
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“Electricity is our biggest source of income. The municipality will support the successful bidder with grants we receive from the government,” Hubbard told the publication.
Massive Eskom debt
According to Hubbard, the interested parties include companies from America and China.
Last week, Minister of Electricity and Energy Kgosientsho Ramakgopa, during a Parliamentary question and answer session, revealed that municipalities nationwide owe Eskom 81.6 billion for bulk purchases, and this debt is increasing.
If Eskom loses one of its more reliable paying customers, it risks growing debt problems as more defaulting municipalities remain, including the City of Johannesburg.
City of Joburg
Recently, Eskom threatened to suspend power supply to Johannesburg due to the metro’s arrears, which amount to nearly R5 billion.
However, Ramakgopa intervened and met with City of Joburg officials to address tensions between the metropolitan municipality and Eskom following the public dispute.
The City of Joburg agreed to pay R1.4 billion of its outstanding bill to Eskom by the end of November, but the mountain of debt remains and is not the city’s only problem.
Eskom tariff increases
Residents are increasingly suffering from power outages due to outdated infrastructure that has not been properly maintained for years, which is also the case in other municipalities.
With Eskom’s proposed tariff increases for the next three years now open for public comment, residents will face grim consequences if the parastatal’s application is approved.
Eskom’s application, submitted to Nersa in August, proposes a 36.15% increase for its 2026 financial year, followed by 11.81% in 2027 and 9.10% in 2028.
ALSO READ: City of Joburg agrees to pay Eskom R1.4bn to avoid power being cut off
