Electricity Minister Kgosientsho Ramokgopa and Johannesburg Mayor Dada Morero held urgent discussions this week to address the metro’s mounting R5.2 billion debt to Eskom, following the power utility’s warning that it may reduce, interrupt, or terminate electricity supply to key bulk points in the city.
The meeting comes against the backdrop of a recent public statement emphasizing accountability, in which he questioned how a major metropolitan area could operate with such disregard for financial obligations to the national power provider.
Minister Ramokgopa explained that the discussions center on implementing a Distribution Agency Agreement (DAA) model—a partnership framework approved by cabinet late last year designed to provide structural intervention in municipalities struggling with electricity revenue management. The minister stressed that the DAA is not a takeover but a collaborative approach to equip local governments with the technical skills, planning capacity, and administrative instruments needed to sustain reliable electricity delivery.
“The biggest cause of the failure of distribution and reticulation is the hemorrhaging of skills in local government,” Ramokgopa stated. “Many municipalities, especially secondary and smaller ones, don’t possess the technical capacity required to discharge a function of that magnitude.”
Under the DAA framework, electricity billing and revenue collection would be ring-fenced and administered through Eskom systems. This ensures transparency: both the municipality and Eskom gain visibility into revenue collected from electricity sales. Funds would first meet obligations to Eskom, a designated portion would be reinvested into maintaining electricity infrastructure, and the remainder could be reallocated to other municipal functions such as salaries and social services.
The minister highlighted that Johannesburg’s situation is particularly acute due to its economic significance. “Johannesburg is too big to fail,” Ramokgopa noted, describing the city as the center of gravity for the South African economy and the financial hub of the country’s markets. Any disruption to power supply would have cascading effects far beyond the metro’s boundaries.
However, Ramokgopa emphasized that Eskom’s fiduciary responsibilities must be respected. “The chair of the board and the board collective can’t sit back and watch when the institution… is likely to deteriorate and end up not being a going concern,” he said. “The minister will not interrupt an exercise on the part of Eskom to exercise its fiduciary responsibility.”
Technical challenges compound the financial crisis. City Power, Johannesburg’s electricity distribution entity, experiences technical losses close to 30%, significantly higher than the national average of around 10% and the international benchmark of 5–7%. The DAA partnership would enable Eskom to assist in addressing these inefficiencies, including formalizing illegal connections, improving billing accuracy, and accelerating the rollout of smart metering infrastructure.
Smart meters, Ramokgopa explained, serve multiple purposes: enabling consumers to monitor usage and avoid unexpected disconnections, ensuring free basic electricity subsidies reach qualifying households directly rather than being absorbed into general municipal budgets, and allowing targeted disconnections for non-payment without penalizing compliant customers.
The minister also addressed broader concerns about electricity costs, noting that cabinet is finalizing a comprehensive strategy to address tariff increases for both households and industrial users, though details remain pending.
On the question of why Johannesburg appears to be receiving different treatment compared to municipalities like Mafikeng or Maluti-a-Phofung, where Eskom previously attached accounts, Ramokgopa pointed to two factors: first, the DAA model now provides a structured, cabinet-approved pathway for intervention; and second, Johannesburg had previously committed to the agreement before falling behind on payments in December and January.
“With Johannesburg, there has been engagement and commitment,” Ramokgopa said. “The DAA seeks to address accountability while providing a more enduring solution on how to ring-fence revenue from electricity sales.”
A three-way engagement involving the minister, the mayor, and Eskom representatives concluded with an in-principle arrangement, with finalization expected imminently. “Tomorrow we are bringing the rest of the teams; we finalize, we’ll announce to the country what that intervention looks like,” Ramokgopa confirmed.
The minister also provided an update on load reduction efforts, confirming that the Western Cape and Northern Cape have eliminated the practice. Free State, Eastern Cape, and North West are on track to conclude by October, with Limpopo following the same timeline. For Gauteng and KwaZulu-Natal, Ramokgopa committed to resolution by March next year, citing resistance from “rent seekers” who profit from illegal connections as a complicating factor.
As discussions continue, the overriding priority remains protecting diligent electricity payers from collateral damage while ensuring Eskom receives payments owed and critical infrastructure receives necessary investment.
