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President Cyril Ramaphosa has praised Eskom’s financial recovery in 2025 but warns of a looming crisis as municipal debt climbs past R100 billion — threatening South Africa’s fragile energy stability.
Ramaphosa Praises Eskom’s Turnaround but Sounds Alarm Over Growing Debt
President Cyril Ramaphosa has commended Eskom for its improved financial and operational performance, marking a major turnaround for the state-owned power utility. However, the President issued a stern warning — Eskom’s ballooning municipal debt crisis could undermine these gains and threaten the utility’s future stability.
The comments follow Eskom’s full-year results for the financial year ending March 2025, where the company reported a R16 billion profit — a dramatic shift from the R55 billion loss recorded the previous year.
Eskom’s Financial Turnaround: Fact or Fragile Recovery?
While Eskom’s management celebrated the profit as a sign of recovery, analysts caution that the numbers tell a more complex story. Much of the improvement stems from taxpayer-funded bailouts, rather than self-sustaining operations.
| Financial Indicator (FY2025) | Performance |
|---|---|
| After-Tax Profit | R16 billion |
| Previous Year’s Loss | R55 billion |
| Government Bailout (Debt Takeover) | R64 billion |
| Diesel Refund (SARS) | R12 billion |
| Tariff Increase | 12.5% |
| Days of Load Shedding | 13 (down from 329) |
According to the Bureau for Economic Research (BER), Eskom would have recorded a R38 billion cash shortfall without government assistance. The report concluded that Eskom’s apparent recovery remains dependent on state bailouts rather than a fundamental turnaround in operations.
Ramaphosa Commends Progress on Load Shedding and Plant Performance
Despite the heavy reliance on state support, President Ramaphosa praised Eskom’s management and workforce for tangible improvements in energy generation and plant reliability.
He noted that coal-fired plant performance has improved, resulting in reduced diesel usage — saving the company approximately R16 billion in operational costs.
“In the 2025 financial year, South Africa experienced load shedding on just 13 days, compared to 329 days the year before. Eskom is to be congratulated on this achievement,” Ramaphosa stated.
The president added that Eskom’s return to profitability, even with its caveats, positions the company to reinvest in infrastructure, accelerate its Generation Recovery Plan, and drive private sector participation in the country’s electricity supply.
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He confirmed that more than R320 billion has been earmarked for infrastructure upgrades and new generation capacity in the coming years.
The Growing Threat: Municipal Debt Crisis
While acknowledging Eskom’s progress, Ramaphosa stressed that the ballooning municipal debt presents a critical financial threat to the power utility’s sustainability.
“Municipal debt arrears have grown by 27% since the previous financial year. This issue needs urgent intervention if Eskom’s financial viability is to be maintained,” Ramaphosa warned.
Eskom’s auditors flagged the municipal arrears as a major risk, alongside the utility’s reliance on government bailouts.
| Municipal Debt Overview (as of 2025) | Amount (R) |
|---|---|
| Arrear Debt (March 2025) | R94.6 billion |
| Arrear Debt (August 2025) | R103.5 billion |
| Year-on-Year Growth | +27% |
| Projected Debt by 2030 (if unchecked) | R300 billion+ |
The problem, the President emphasized, is not new — but it has reached unsustainable levels. Eskom continues to work with municipalities to develop “sustainable repayment solutions,” though progress has been slow.
Why Municipalities Can’t Pay Eskom
Energy experts and government officials point to a vicious cycle that traps both municipalities and consumers.
Electricity Minister Kgosientsho Ramokgopa has repeatedly described the situation as an “unsustainable equation.” Municipalities owe Eskom over R100 billion, yet they are also owed R400 billion from residents and local businesses who are unable or unwilling to pay their bills.
| Debt Breakdown | Amount (R) |
|---|---|
| Municipal Debt to Eskom | 100 billion |
| Consumer Debt to Municipalities | 400 billion |
| Affordability Gap | Increasing annually |
Many households face severe cost-of-living pressures, with food insecurity and high unemployment forcing people to choose between buying essentials or paying electricity bills.
This cycle perpetuates non-payment, while Eskom continues to raise tariffs — including two planned 9% increases in 2026 and 2027 — further worsening affordability and payment compliance.
Eskom CEO’s Warning: Bailouts May Continue
Eskom CEO Dan Marokane echoed the president’s concerns in a recent interview with Newzroom Afrika, warning that if the municipal debt crisis continues unchecked, Eskom may have no choice but to request additional financial assistance from the National Treasury.
“Without decisive intervention, Eskom’s cash flow will again become constrained. The utility cannot indefinitely rely on government bailouts,” Marokane said.
He cautioned that if the current debt growth rate persists, municipal arrears could exceed R300 billion by 2030, crippling the utility’s ability to invest in infrastructure and modernisation.
Analysts: A Temporary Fix, Not a Turnaround
Economists have welcomed Eskom’s operational improvements but warn that financial sustainability remains fragile.
While operational efficiency — including reduced load shedding and improved generation — signals progress, the underlying structural issues remain unresolved.
| Key Financial Challenges Identified | Impact on Eskom |
|---|---|
| Dependence on Government Bailouts | Threatens long-term sustainability |
| Escalating Municipal Debt | Erodes revenue and cash flow |
| Rising Tariffs | Increases consumer non-payment |
| Deferred Maintenance Costs | Risks future reliability |
| High Debt Servicing Obligations | Limits reinvestment capacity |
According to Energy Policy Institute analysts, Eskom’s turnaround can only be considered real when it generates sufficient revenue to fund operations, pay off debt, and invest in new generation capacity — all without relying on state bailouts.
The Road Ahead: Reform and Responsibility
Ramaphosa reaffirmed the government’s commitment to restructuring Eskom and pursuing reforms that will open the electricity market to more private players.
These reforms aim to reduce Eskom’s monopoly, improve competition, and relieve financial pressure on the state.
He also hinted that ongoing reforms in the National Energy Crisis Committee (NECOM) could lead to structural changes in how municipalities manage electricity distribution and payments.
“We continue to work with municipalities to find sustainable ways to settle their accounts with Eskom,” Ramaphosa said. “This is essential for Eskom’s financial health and for South Africa’s energy future.”
Conclusion
Eskom’s R16 billion profit marks an important milestone, but the celebration is tempered by a looming municipal debt crisis that threatens to unravel these gains.
With over R100 billion in unpaid municipal accounts and continued reliance on taxpayer bailouts, South Africa’s power utility remains on unstable footing.
Unless government, municipalities, and consumers collaborate to create sustainable payment and supply models, Eskom could face another crisis — this time driven by financial insolvency rather than technical failure.
For now, Eskom’s lights are on — but without urgent intervention, the glow of recovery may soon fade.
