South Africa votes in local elections as Eskom waits on R122.5bn owed by municipalities

South Africans go to the polls today to elect local councils. For Eskom, the state power company, the result matters for one reason above all: the money towns and cities owe it.

The debt

Municipalities owe Eskom R122.5 billion, the company says. Many buy power from Eskom in bulk and sell it on to homes and businesses, but do not pass the money back in full.

The problem starts lower down. Households and businesses owe municipalities R484.5 billion, and only 63.9% of bills are collected, according to National Treasury data reported by Reuters.

Eskom says the debt "weighs heavily on the national budget", the country's credit rating and borrowing costs.

The clean-up so far

In July, Finance Minister Enoch Godongwana froze some funding to councils that were not paying and set a roadmap with deadlines up to 30 November.

By the end of July, 38 of 69 municipalities had agreed repayment plans and R4.2 billion had been paid towards debts owed to creditors. But of 71 municipalities approved for a debt relief scheme launched in April 2023, only eight are keeping to it.

Eskom said the Treasury's enforcement steps are "not sufficient alone".

Why the vote matters

South Africa had 70 hung councils after the 2021 local elections. Louw Nel, a senior political analyst at Oxford Economics Africa, told Reuters the number could rise to about 100 this time.

Reuters reported that more hung councils could stall the debt recovery effort.

What it means for you

Nigeria has its own version of this problem. DisCos here collect only part of what they bill, and the shortfall ends up as debt owed to power stations or as a cost to government. Our story on DisCo collections in August shows the scale.

South Africa's experience shows that when local bodies stop paying, the national power company and, in the end, taxpayers carry the cost. Whoever wins today's vote inherits that bill.