Joburg has a R44bn City Power problem

Funds paid by residents for electricity are swept into a common pool for use elsewhere, which helps explain the surge in outages. A few numbers leap off the page of the latest Centre for Development and Enterprise (CDE) report on City Power, the electricity provider to the City of Johannesburg (CoJ): An infrastructure backlog of R44.25 billion; A R4.3 billion deficit in 2025 as expenditure galloped ahead of revenue; and 2.1 million ‘forced interruptions’ in the nine months to March 2026. “Planned maintenance has repeatedly fallen below target, while the network is also under pressure from illegal connections, overloading, theft and vandalism,” reads the report, Powering Joburg’s Turnaround. “These criminal actions damage infrastructure and place further strain on already stretched maintenance teams. “In effect, the system is no longer managing its assets – it is managing their decline.” Of the 13 entities delivering services in the city, City Power towers above the rest with revenue of R22.3 billion and expenditure of R26.6 billion in the latest financial year, without counting capital grants and contributions from elsewhere. That’s a tidy shortfall, and there’s no sign it’s getting any better. In fact, City Power’s overdraft has ballooned to R19.1 billion. Fixing City Power is therefore critical to the overall turnaround of the city. Making matters worse is the fact that revenue from electricity sales is not ring-fenced for City Power but is instead used to cover shortfalls elsewhere in the city budget. That’s despite the city committing to a ring-fencing arrangement for City Power and Joburg Water in November 2025, where 70% of revenues would be retained by the entities and 30% transferred to the city. Bad idea … Equally troubling, in the view of CDE, some candidates for mayor in the upcoming local government elections propose collapsing some or all the 13 entities back into the city administration. Reintegration now would not address the underlying problems; it could even make things worse. “Collapsing them back into an already weak city administration will not fix them,” said CDE executive director Ann Bernstein. “It would change where the functions sit without addressing the problems that have left the utilities unable to deliver. “And it would bog down the entire city administration in a very big restructuring process for years when what is required is the urgent restoration of reliable service delivery.” An accelerating spiral of failure enters when infrastructure is allowed to deteriorate at the rate it has in Joburg. City Power reported 2.1 million forced interruptions between July 2025 and March 2026, and it took 11 hours on average to restore services. Many customers experienced multiple interruptions lasting an average of 20.6 hours. In some cases, customers went weeks without power. City Power purchases electricity from Eskom and distributes it to residents and businesses across Joburg. It oversees 19 000km of cabling, much of it in decay or no longer suitable for use. Of the total power outages in Johannesburg, 60% were caused by deteriorating and outdated networks, according to the Auditor-General of South Africa. Domino effect Some R5.25 billion of City Power’s debt to Eskom was reportedly settled in August 2026, but questions remain about where this came from. A further R1.86 billion was due at the end of August. The city has been mum on the source of these funds, leading to speculation that this came from the Ministry of Finance. If so, these are funds that can no longer be used elsewhere in the city and only prolongs its inevitable financial deterioration. City Power does not generate enough cash to maintain and renew its infrastructure, creating a doom loop for a city already deep in trouble. Minister of Electricity and Energy Kgosientsho Ramokgopa described the problem starkly in 2026: “For every R100 of bulk purchases they can only reticulate about R70. They’ve already lost R30, even before they can collect. So, you can see that’s a race to the bottom.” Fixing it seems simple enough: City Power needs to know its customers, whether the meter works and how much is consumed. Meters must be accurately read and billed, disputes resolved quickly, and revenue collected. Why so hard to fix? There have been attempts in the past to remedy all this, notably the 2009 Project Phakama, which cost R580 million and was intended to bring Joburg’s fragmented billing systems onto a single SAP platform covering around 1.3 million account holders. By 2011, 60 000 billing queries had been logged, and only 35 535 had received responses. There is widespread consensus that billing remains an unresolved crisis that needs urgent attention. What was supposed to be a simple fix was anything but. One of the key issues identified by CDE is leadership, with multiple changes in CEO and CFO positions over the years, and high staff turnover making recovery sticky. CDE has several recommendations to fix City Power: Appoint capable leaders: Strengthen the board, appoint a permanent CEO and CFO, and fill critical engineering and management vacancies on merit (not political affiliations). Ring-fence electricity revenue: Give City Power predictable cash for Eskom payments, maintenance and investment. Any transfer to the wider city budget should be explicit and affordable. Fix billing and collections: Correct customer and meter records, resolve disputed bills, protect households that qualify for free basic electricity, and enforce payment consistently among those who can pay. Bring in private expertise and capital: Start with tightly defined, performance-based contracts for metering, loss reduction and maintenance; prepare larger privately financed network projects separately. Publish measurable results: CDE proposes a first-100-days turnaround plan and regular reporting on collections, electricity losses, outage restoration, maintenance and spending. “Johannesburg’s voters have an important opportunity on 4 November 2026,” the report states. “The state of the City’s utilities, and what should be done to fix them, should be part of the debate about Johannesburg’s future. “Parties and candidates seeking to govern the city should be pressed to explain how they will restore reliable electricity, water and refuse collection, and how they will rebuild the institutions responsible for delivering them.” CoJ and City Power have been approached for comment. This article will be updated once their responses are received. This article was republished from Moneyweb. Read the original here.