Increasing municipal debt is a threat to Eskom’s viability

ALTHOUGH Eskom reported an annual profit in 2024/25, for the first time in a decade, the improved financial performance remains at risk, partly due to escalating municipal debt arrears.

- HELMO PREUSS

ALTHOUGH Eskom reported an annual profit in 2024/25, for the first time in a decade, the improved financial performance remains at risk, partly due to escalating municipal debt arrears.

(SUPPLIED)

In 2023/24, government initiated a debt-relief arrangement to strengthen Eskom's balance sheet, enabling it to restructure and undertake essential investments and maintenance required to ensure a stable electricity supply.

As reported in the 2025 Budget Review, partly in response to Eskom's improved performance, the National Treasury revised the package, extending the support period to 2028/29 and reducing the total relief provided from R254 billion to R230bn. Legislation introduced in September 2025 provided for these measures.

The fiscal risk associated with Eskom has eased, although continued implementation of operational and financial reforms is critical to sustain progress and ensure lasting stability. This is underscored by the fact that in September 2025, Eskom electricity generation fell by 5.7% year-on-year (y/y) after a 3.1% y/y drop in August. Non-Eskom generation eased bya milder 2.6% y/y in September after a 0.4% y/y gain in August and as more non-Eskom generation comes online, so the divergence between Eskom generation growth and non-Eskom generation growth is likely to become larger.