Eskom says municipalities owe it R122.5bn, and an analyst warns that hung councils after Wednesday's local government elections could slow efforts to recover the money.

Eskom said the debt "weighs heavily on the national budget, the sovereign credit rating and borrowing costs".

What the numbers show

According to National Treasury budget data, households and businesses owe municipalities R484.5bn, but only 63.9% of that is collected. That shortfall limits what municipalities can pay Eskom.

Of the 71 municipalities approved for the debt relief programme launched in April 2023, only eight are compliant on current-account payments. The other 63 are overdue.

  • By the end of July, 38 of 69 municipalities had concluded repayment plans.
  • R4.2bn had been paid toward outstanding creditor debt.

Why hung councils matter

A council is hung when no party or group of parties holds an outright majority, so a mayor and executive can only be elected through agreements between parties. After the 2021 local elections, 70 councils were hung.

Louw Nel, senior political analyst at Oxford Economics Africa, said: "I would not be surprised if that number goes up to maybe 100."

The concern is that councils without a stable governing arrangement may struggle to agree on payment plans and budgets while the national government pushes for compliance.

Treasury's position

In July, Finance Minister Enoch Godongwana froze funding to offending municipalities and set a compliance roadmap with deadlines stretching to 30 November.

Godongwana said: "National Treasury recognises that communities should not carry the immediate consequences of failures by municipal institutions."

The cost is already visible in some places. Residents of Matjhabeng in the Free State have gone more than 20 days without water, and the municipality owes its water board R9.5bn.

What we do not yet know

  • How many councils will be hung once results are declared.
  • Whether the 30 November compliance deadlines will hold after the vote.
  • How Eskom's figure will move once new councils take office.

In March, the Standing Committee on Appropriations, chaired by Mmusi Maimane, said municipal debt "remains an existential threat to Eskom's sustainability".