12 hours ago
Electricity tariffs force a choice between food or power, says Electricity Minister Ramokgopa
The minister brokered an agreement between City Power and Eskom, which had almost ended up in court.
With electricity tariffs up by an average of 12.74% between April and July (when municipal tariff increases kick in), Electricity Minister Kgosientsho Ramokgopa said energy poverty was biting South Africans.
Ramokgopa said that the rapidly rising cost of electricity was forcing households to choose between food and energy (see this report from Daily Maverick in 2024). Because people can't afford their bills, debt owed by municipalities to Eskom is growing at R3-billion a month and has now overshot a total of R100-billion. This, in turn, threatens Eskom's viability.
Ramokgopa was speaking, along with Johannesburg Mayor Dada Morero, to announce a deal over a festering dispute between the city distributor, City Power, and Eskom, which almost ended up in court in December. The utility threatened to cut off four substations where most of the R4.9-billion billing debt had racked up; City Power, in turn, said that R3.4-billion had been incorrectly billed and breathed fire at Eskom.
On Tuesday, 24 June, Ramokgopa brokered an agreement for R3.2-billion to be paid over four years, with an additional tariff relief of R830-million.
An upcoming data investigation by the Daily Maverick has found that there are more than 30,000 power cuts in the city each quarter as City Power struggles with declining revenues (because people can't afford their electricity bills) and a R44-billion bill to upgrade aged infrastructure.
Ramokgopa said state departments should not be taking each other to court and that the SA National Development Institute (Sanedi) had mined the data and evidence to help the parties find an agreement that worked for them. Its report took three months rather than three weeks to complete because the work was more complex than initially thought. It offered a template for other billing disputes between Eskom and municipalities.
Council proceedings show that City Power increased revenue by 17.4% in the year to June, but expenses shot up by 23%, resulting in a net loss of R602-million. It has a bank overdraft of R15.34-billion in the year to June.
Ramokgopa said that while big cities such as Johannesburg could work around the national cost of the power crisis, smaller municipalities were falling off the cliff. Municipalities levy charges on the sale of electricity and make most of their revenue from these. DM
