When the lights flicker in a small shop on the outskirts of Cradock, the owner wonders whether the next outage will be the last. The uncertainty is not just about a single bulb; it reflects a municipal cash-flow crisis that now sees the Inxuba Yethemba Local Municipality paying only R2,780.02 on a monthly Eskom invoice of almost R12.8 million.
The figure, disclosed after Democratic Alliance (DA) Eastern Cape MPL Heinrich Müller questioned Cooperative Governance and Traditional Affairs MEC Zolile Williams, shows the municipality settled less than 2% of the electricity it was billed for in the period April to September 2025. An Eskom presentation dated 10 October 2025 recorded six billing cycles totalling R111.1 million, of which the municipality paid roughly R2 million.
Under an April 2025 cooperation agreement, a formal pact that required the municipality to clear its current Eskom account in full and contribute at least R500,000 each month towards historic arrears, the payments fell dramatically short. The agreement was intended to stop the debt from swelling, yet the municipality’s failure to meet those obligations meant new debt continued to accumulate.
In August 2026, Eskom told the National Council of Provinces that Inxuba Yethemba’s overdue debt had risen to approximately R943 million by the end of June 2026. The utility also warned that the proposed monthly payment was insufficient to cover the current electricity account. Because the municipality had not signed a Distribution Agency Agreement, a mechanism Eskom promotes to ring-fence electricity revenue and improve collection, Eskom moved the municipality onto a bulk prepayment arrangement in May 2026. Under this system, the municipality receives only as much electricity as it pays for in advance.
Municipal arrears are a national issue. Eskom reported that municipal debt reached R111.6 billion in 2026, despite the National Treasury’s debt-relief programme, and that arrears could climb to about R358 billion by the 2031 financial year if decisive action is not taken. Municipal customers account for 42% of Eskom’s sales, so poor payment levels directly threaten the utility’s financial sustainability.
For local businesses and households, the stakes are immediate. Unpaid electricity bills translate into load-shedding schedules, higher tariffs for compliant consumers and, in extreme cases, disconnections. Small enterprises that rely on steady power, from retail stores to agro-processing units, face lost revenue and increased operating costs, a pressure that can push marginal businesses into insolvency.
Politically, the DA is pressing for greater transparency. Müller said he will submit a formal question to the Eastern Cape Legislature seeking a reconciliation of electricity revenue collected, payments made to Eskom and compliance with the debt-relief programme. He argued that residents who pay for electricity deserve to know why the municipality repeatedly fails to honour its obligations.
Eskom has warned it could invoke the Promotion of Administrative Justice Act (PAJA), legislation that allows entities to seek judicial review of administrative decisions, if the municipality does not resolve its arrears. Such a step could lead to legal action to enforce payment or to seize assets, adding another layer of uncertainty for the community.
While the municipality grapples with its own balance sheet, the broader lesson for SMEs is clear: reliance on municipal services carries hidden financial risk. Companies should monitor municipal payment performance, consider backup power solutions and stay informed about any changes to the bulk prepayment arrangement that could affect supply.
Residents and business owners can follow developments through the BusinessTech report and Eskom’s public statements on Eskom. For more coverage of how municipal debt impacts local economies, see our Retail & Consumer section.
Municipal non-payment of Eskom bills of this kind has become a recurring driver of the utility’s own bad debt, which Eskom has repeatedly flagged to the National Council of Provinces and Treasury as a threat to its already fragile finances. Cooperation agreements like the one Inxuba Yethemba signed are one of several intervention tools available, alongside more drastic options such as prepaid meter installation or, in extreme cases, supply interruption to non-residential accounts, though the latter is politically fraught given the knock-on impact on residents and local businesses who are current on their own municipal accounts. Eskom’s own municipal debt disclosures track the scale of arrears across the country’s local authorities. For related coverage, see this site’s Energy and Infrastructure coverage.
