Crippled by debt and crime, City Power needs urgent reform, says report

City Power, the entity that keeps Johannesburg’s lights on, is R20bn in the red and spends at least R2bn more than it collects in income. It also loses at least 42% of the electricity it buys from Eskom, mostly through theft and vandalism.

In its quarterly report tabled this month at the last City of Johannesburg (CoJ) council meeting of the year, City Power board chair Makhosini Kharodi warns that, if not addressed, these problems threaten the sustainability of the entity.

The report covers City Power’s performance for the period from July 1 2025 to September 30 2025 of the 2025/26 financial year.

Kharodi, in his foreword to the report, warns: “The first quarter [of this financial year] has reinforced the board’s continuing concern that City Power’s operational progress remains constrained by deep structural and financial weaknesses which, if not decisively addressed, threaten the sustainability of the entity.

“The company closed the quarter with a deficit after tax of R1.978bn and a net overdraft of R20.1bn, reflecting the ongoing imbalance between revenue and expenditure. These figures underline the urgency of implementing the structural reforms needed to restore financial stability and operational efficiency.”

The report paints a picture of an entity in deep trouble, plagued by high costs, a restricted cash flow, customers seeking alternative energy suppliers and a massive loss of revenue through theft and illegal connections.

Late payments, which are a recurring theme across all CoJ entities, mean that service providers refuse to take on additional work, which has a knock-on effect on service delivery and leads to stoppages of critical projects.

The report states that late payment also means service providers resorting to criminal means to survive, such as vandalising and stealing copper equipment; an increase in extortion cases involving service providers illegally disconnecting and/or reconnecting customers for a fee; and service providers losing motivation to continue working for City Power.

“This may have negative effects specifically on contractors entrusted to disconnect non-paying customers. The potential to take bribes is very high,” the report notes.

City Power’s revenue for the quarter was about R7.1bn against an expenditure of approximately R9.1bn, resulting in a deficit after tax of R1.978bn.

While total revenue increased year-on-year — up R787m from R6.3bn in the first quarter of 2024/2025, it was mainly due to higher service-charge tariffs and increased internal recoveries from municipal entities, the report says.

The theft of copper cable and vandalism are moving targets across the length and breadth of the network infrastructure. Given the population of the network, a step change and multidimensional strategy is required to combat cable theft, vandalism and sabotage of the network
— City Power report

Total expenditure rose to R9.069bn, an increase of R522m, compared to R8.547bn in Q1 of 2024/2025. This is primarily due to higher bulk purchase costs, driven by tariff increases and higher energy volumes purchased, as well as increased internal charges.

On the operating budget, City Power overspent by R484m against a year-to-date budget of R8.585bn. Eskom purchases exceeded budget by R850m, while electricity purchases from the privately owned Kelvin power station were R486m below budget. Overall, bulk purchases were R364m over budget.

City Power says it faces increasing competition in the evolving energy market, with customers moving to alternative energy sources such as solar. The report warns that this threatens City Power’s revenue base, market share and long-term sustainability.

Around 10% of South African households use solar power as a more cost-effective energy source given the country’s history of load-shedding and rising electricity tariffs. In addition, the 11.32% Eskom tariff increase in July this year has added to the burden faced by ratepayers in Johannesburg.

The report notes that theft, vandalism and fire incidents in the inner city are the biggest risks the entity faces. The situation is worsened by ageing infrastructure and a planned maintenance backlog that remains dependent on the availability of funding.

Theft and vandalism incidents decreased from 202 (July–August 2024/25) to 186 (July–August 2025/26), representing a 7.9% reduction, slightly below the 10% annual reduction target. The year-on-year target remains a 10% reduction of theft and vandalism incidents, translating to a decrease in total annual incidents from 1,556 to 1,400, or an average monthly reduction from 130 to 117 incidents.

Arrests related to infrastructure crime decreased from 60 to 49. This is linked to an increase in suspects arrested in the previous financial year, specifically in underground tunnels, indicating the effectiveness of the security strategies deployed and that kingpins are among the arrested suspects.

However, City Power says risks remain high. “The theft of copper cable and vandalism are moving targets across the length and breadth of the network infrastructure. Given the population of the network, a step change and multidimensional strategy is required to combat cable theft, vandalism and sabotage of the network.”

The report notes that financial limitations continue to hamper the ability to address maintenance backlogs and invest in infrastructure upgrades, and says the current state of the network means that a single major outage can have widespread and consequential effects on power supply security and City Power’s reputation.

It also says that because criminal syndicates reinstate illegal connections within a few days of them being cut off, joint operations between the entity and the Johannesburg Municipal Police Department (JMPD) are unsustainable.

City Power bought 2,982,511,319 kWh units and sold 1,728,203,856 kWh units in the quarter dealt with in the report. Losses amount to 42.06%.

“This is mainly driven by an increase in theft and vandalism, illegal connections, bypassed meters and inefficiencies within the revenue value chain. In addition, the overall performance of meter reading dropped due to having challenges with the meter-reading service providers,” the report says.

It adds that initiatives to mitigate this loss include auditing 40,000 customers who converted to prepaid electricity but are not buying any; upgrading ageing infrastructure to reduce losses in the distribution network; exploring alternative energy sourcing to diversify the supply; and continuing rolling out microgrids and solar high masts to lower reliance on Eskom.