Joburg Mayor Promised No Blackouts So Where Is the Deal?

The City of Johannesburg (CoJ) faces an escalating electricity debt crisis with Eskom, despite mayoral assurances of no blackouts. While the Mayor and the Minister of Electricity announced a resolution in principle, Eskom's formal legal process under the Promotion of Administrative Justice Act (PAJA) to interrupt supply remains active, and no signed, binding agreement has been made public. This legal standoff, rooted in a R5.2 billion arrear debt and a disputed R3.4 billion over-billing claim by CoJ, highlights critical issues in inter-governmental financial relations, municipal service delivery obligations, and the transparency required in public sector agreements. Recent High Court judgments have referred aspects of the dispute to arbitration, underscoring the complex legal landscape governing bulk electricity supply to municipalities.

The City of Johannesburg (CoJ), South Africa's economic hub, finds itself embroiled in a precarious legal and financial standoff with the national power utility, Eskom. Despite public assurances from the Johannesburg Mayor that residents will not experience blackouts due to the city's debt, Eskom's formal legal process to potentially cut the city's power supply remains firmly in motion. This divergence between political pronouncements and the ongoing legal reality has created significant uncertainty for residents and businesses alike.

At the heart of this crisis is a substantial R5.2 billion arrear debt owed by CoJ and its electricity distributor, City Power, to Eskom, compounded by a further R1.58 billion current account that was due in early June 2026. While the Minister of Electricity and Energy, Kgosientsho Ramokgopa, and Mayor Dada Morero announced in May 2026 that a resolution had been reached, Eskom has clarified that its Promotion of Administrative Justice Act (PAJA) process has not been suspended, citing City Power's failure to meet payment obligations under a conditional agreement. The absence of a publicly disclosed, legally binding agreement leaves a critical gap, prompting legal challenges from civil society organisations demanding transparency and accountability.

This article will delve into the intricate legal framework governing the relationship between Eskom and municipalities, examining the statutory obligations, relevant case law, and the implications of the current dispute for practitioners. It will highlight the tension between Eskom's commercial imperative to recover debt and the constitutional mandate of municipalities to ensure continuous service delivery, particularly in the absence of a clear, enforceable resolution.

The provision of electricity in South Africa is governed by a multi-layered legal framework. The Constitution of the Republic of South Africa, 1996, places electricity and gas reticulation as a functional area of local government in Schedule 4B, obliging municipalities to ensure the sustainable provision of services to communities. Eskom, as the national electricity generator and bulk supplier, operates under the Electricity Regulation Act 4 of 2006 (ERA), which establishes a national regulatory framework and empowers the National Energy Regulator of South Africa (NERSA) to regulate the industry, including tariffs and licensing.

Financial relations between Eskom and municipalities are often contentious, with municipal debt to the utility being a persistent national problem. The Municipal Finance Management Act 56 of 2003 (MFMA) provides the legislative framework for local government finances, imposing duties on municipalities regarding financial management and debt payment. When disputes arise between organs of state, the Intergovernmental Relations Framework Act 13 of 2005 (IRFA) provides mechanisms and procedures for dispute settlement, emphasising cooperative governance. Courts have consistently held that Eskom, as an organ of state, must exhaust these intergovernmental dispute resolution mechanisms before resorting to drastic measures like cutting supply.

Historically, Eskom has pursued legal action against defaulting municipalities. A significant precedent was set in *Eskom Holdings SOC Ltd v Resilient Properties (Pty) Ltd and Others* (2020) ZASCA 185, where the Supreme Court of Appeal affirmed Eskom's right to payment for services rendered but also ruled that Eskom's decision to interrupt supply to Emalahleni and Thaba Chweu local municipalities was unconstitutional due to non-compliance with constitutional and statutory obligations, particularly the IRFA. This case underscored the need for Eskom to adhere to fair administrative processes, including those under PAJA, before taking action that impacts basic services.

The current situation in Johannesburg illustrates the complex interplay of statutory obligations, contractual agreements, and administrative law. Eskom's ongoing PAJA process is a direct consequence of the City of Johannesburg's alleged failure to honour a previous settlement agreement, which was made an order of the High Court on 7 November 2025. This indicates that the dispute has moved beyond mere commercial disagreement into the realm of judicial enforcement, with Eskom seeking to exercise its rights under the court order and the ERA. The PAJA process requires Eskom to provide affected parties, including residents and businesses, an opportunity to make representations before a final decision on supply interruption is made.

Adding another layer of complexity, the City of Johannesburg and City Power launched a counter-application in the Gauteng Local Division, Johannesburg, alleging that Eskom over-billed them by R3.4 billion and sought to apply set-off against their outstanding debt. In *Eskom Holdings SOC Ltd v City of Johannesburg Metropolitan Municipality and Others* (2024/048808) [2024] ZAGPJHC 579, the High Court interdicted Eskom from interrupting supply based on alleged non-payment and referred the disputes to arbitration, finding that the defence of automatic set-off could not be resolved in urgent motion proceedings due to factual disputes. Subsequently, in *Eskom Holdings SOC Ltd v City of Johannesburg Metropolitan Municipality and Others* (2024/048808) [2024] ZAGPJHC 794, the court granted CoJ leave to appeal, acknowledging that there were reasonable prospects an appeal court might reach a different conclusion on the set-off defence. This highlights the ongoing legal contestation over the quantum of debt and the validity of the City's counter-claim.

The public announcements by the Mayor and the Minister of Electricity in May 2026, suggesting a resolution and a Distribution Agency Agreement (DAA), were met with Eskom's clarification that the PAJA process was not suspended due to the City's failure to meet conditional payment obligations. This discrepancy underscores the critical importance of formal, legally binding agreements over political statements, especially when dealing with public funds and essential services. The Organisation Undoing Tax Abuse (OUTA) and other stakeholders have rightly demanded public disclosure of any such agreement, emphasising that residents have a right to scrutinise how their money is managed and to ensure any deal is legally sound and includes accountability mechanisms.

The legal position, as affirmed by the Supreme Court of Appeal, is that while municipalities have a constitutional duty to provide electricity as a basic service, they also have a corresponding obligation to pay Eskom for bulk supply. Disputes, even those referred to arbitration, do not automatically absolve municipalities from their payment obligations. The lack of a transparent, enforceable agreement, coupled with the ongoing PAJA process and the unresolved arbitration, places Johannesburg residents and businesses in a precarious position, facing the real possibility of supply interruptions despite mayoral assurances.

For legal practitioners, the City of Johannesburg-Eskom dispute serves as a stark reminder of the complexities inherent in inter-governmental financial relations and service delivery. Attorneys advising businesses and residents in Johannesburg should be acutely aware that despite political assurances, the legal threat of electricity supply interruptions remains active. The ongoing PAJA process, with its extended public submission deadline, presents a crucial window for affected stakeholders to make formal representations to Eskom, which could influence the utility's final decision.

Practitioners should closely monitor the outcome of the arbitration proceedings regarding the City's over-billing claims and any developments concerning the appeal against the High Court's decision. The absence of a publicly accessible, signed agreement between Eskom and the City of Johannesburg means that any 'deal' remains an unconfirmed political promise rather than a legally enforceable resolution. The demand for transparency by civil society organisations like OUTA is critical, and legal professionals should advise clients on their rights to information and potential avenues for intervention to protect their interests in the face of potential service disruptions. The resolution of this dispute will not only impact Johannesburg but will also set important precedents for other municipalities grappling with similar debt challenges across South Africa.