Tshwane Signs Agreement to Settle R6.6 Billion Eskom Debt Over Five Years

The deal also marks a step toward reducing South Africa’s energy sector risks, as municipalities across the country grapple with mounting debts to Eskom.

The City of Tshwane has formalized a significant agreement with power utility Eskom, resolving a prolonged dispute over a R6.6 billion arrear debt for bulk electricity supply. The agreement, finalized as a court order on 26 November 2024, sets a clear path for Tshwane’s financial recovery while ensuring Eskom’s sustainability.

The settlement involves a five-year payment arrangement, with Tshwane committing to make:

An initial payment of R400 million in December 2024.

Monthly payments, culminating in full settlement by March 2029.

Two critical conditions underpin the agreement:

Timely payment of current accounts: All future accounts must be paid in full by their respective due dates.

Default clause: If Tshwane fails to meet its payment obligations, the agreement will be terminated, and the total outstanding debt will become immediately payable.

The agreement followed a court case set for hearing on 26 and 27 November, which was resolved amicably before proceedings commenced.

Eskom's Perspective

Monde Bala, Eskom’s Distribution Group Executive, praised the resolution, highlighting its role in ensuring the utility’s operational and financial sustainability.

“This agreement plays a part in maintaining the sustainability of Eskom to drive South Africa’s economic growth while reducing our burden on taxpayers.”

Eskom expressed confidence that the arrangement would stabilize Tshwane’s finances while enabling uninterrupted power supply to residents and businesses.

Tshwane’s Response: A Turning Point

Tshwane Mayor, Dr. Nasiphi Moya, described the agreement as a “landmark milestone” in the city’s journey toward financial stability.

“This agreement is a significant milestone in our journey to financial recovery and stability. It signals a turning point, ending years of costly litigation and redirecting focus toward improving service delivery and revenue collection systems.”

The Mayor highlighted proactive steps already taken, including a R425 million payment in October 2024 to reduce arrears. Moya pledged that the city would adopt stronger financial governance practices to prevent future financial mismanagement.

Broader Implications and Future Plans

The agreement reflects a collaborative effort between Tshwane and Eskom to prioritize financial responsibility and service delivery. As part of its commitment, Tshwane plans to:

• Enhance revenue collection mechanisms, focusing on improving municipal billing systems.
• Implement auditing and monitoring measures to ensure compliance with the agreement.
• Strengthen collaboration with stakeholders, including business sectors and residents, to sustain fiscal discipline.

The deal also marks a step toward reducing South Africa’s energy sector risks, as municipalities across the country grapple with mounting debts to Eskom.

Tshwane’s administration expressed optimism that this resolution would inspire other municipalities to adopt proactive approaches to their financial obligations, fostering national economic resilience.