City Power’s R44bn backlog blues

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Johannesburg’s City Power is plagued by a R44bn backlog, rampant vandalism and severe revenue losses and is now deferring critical infrastructure projects as its financial crisis deepens.

To make things worse, the entity is not bringing in enough money to make ends meet.

Joburg mayor Dada Morero and finance minister Enoch Godongwana said on Tuesday they had held a productive meeting to “reflect on the progress made, confront the challenges that remain and agree on practical interventions to strengthen the city’s financial position”. No other details were given on the plan to turn around the city’s financial mess.

City Power is not the only entity in trouble, its third-quarter report for 2026 shows that its financial situation is worsening. It must deal with infrastructure built in the 1940s, a dramatic increase in security incidents, hundreds of thousands of outages every month, and persistent electricity losses of about 30%. In the first three months of this year, City Power lost 41%, 23%, and 18%, respectively, of all the power it purchased from Eskom.

The utility says the loss rate means that approximately one in seven units generates no billing revenue. At current bulk purchase cost levels, this is the largest single expenditure line and the primary driver of the R405m expenditure overrun. “This represents a significant and recurring financial haemorrhage,” the third-quarter report notes.

City Power says 60% of electricity outages are due to deteriorating infrastructure, some nearly a century old. An additional 20% result from theft and vandalism, 5% from network overloads (especially in informal settlements), and 15% from Eskom-related faults and third-party damage.

City Power’s overdraft has increased by 34% in just one year. This overdraft is historical and stems from the founding of City Power. It is an inter-city loan, but the city charges interest on it, which is exacerbating the overdraft.

During the first three months of this year, there were 208 cable theft incidents and 93 acts of vandalism reported. Cable theft hotspots include Randburg, Lenasia, Reuven, and Roodepoort.

This past weekend, a spike in cable theft and vandalism cost the utility more than R311 000. Preliminary figures show the losses stem from just five cable theft incidents, with the final cost expected to be significantly higher.

The largest single theft involved about 400 metres of copper cable in Jeppestown, while three suspects were arrested in Marshalltown for allegedly stealing underground cables.

Arrests are down 32% from the previous financial year, which City Power says may indicate operational challenges in enforcement or evolving criminal tactics. There has been a 52% increase in convictions, with cumulative sentences of 145.5 years’ imprisonment.

Increased security costs have overrun the budget by R37.9m due to stronger security measures being implemented to protect City Power’s infrastructure, as well as protection for the revenue protection team as they visit volatile areas where they are often threatened.

City Power admits that its precarious financial position has placed it in a high-risk environment. Because of funding pressure, several key infrastructure projects have been deferred to the next financial year, the third-quarter report stated.

The projects include:

The mobile substation programme,
The transformer refurbishment programme,
Orlando Switching Station,
Dainfern Substation,
Eikenhof Substation,
Nancefield-Nirvana Tower project, and
The replacement of aged standby boards at the Cydna, Gresswold, Mayfair, and Ridge substations.

Spokesperson Isaac Mangena said the funding allocated for the projects in the 2025/26 financial year was deferred to the approved 2026/27 budget after implementation timelines were affected by long procurement lead times, statutory approval processes and other project readiness requirements.

He said approximately R6m had already been spent on the Nancefield-Nirvana Tower project and R9.9m on the transformer refurbishment programme during the previous financial year, while service providers were now being appointed to begin work during the current financial year.

City Power acknowledged that delayed contractor payments had affected the implementation of some projects. It currently owes creditors approximately R1.5bn. Mangena said the entity continued to pay contractors and suppliers as cash became available while prioritising the oldest outstanding invoices.

Work at Pennyville has been suspended due to non-payment, and at the Brynorth substation, the contractor is demanding full payment before proceeding with work.

Mangena said the deferred projects remained strategic priorities. The Eikenhof substation upgrade would increase network capacity, improve reliability and strengthen electricity supply to the Eikenhof Pumping Station, which supports infrastructure supplying around 60% of Johannesburg’s water.

Although the Eikenhof project has been delayed by about six months, Mangena said City Power did not expect the delay to affect the city’s water supply because all transformers at the substation had already been returned to service, and routine maintenance was continuing while the capital upgrade was implemented.

He said adequate funding has been allocated to allow the deferred projects to proceed during the 2026/27 financial year.

However, executive director of JoburgCAN, Julia Fish, warned that delaying the Eikenhof substation upgrade could have serious consequences for Johannesburg’s water security.

Fish said the project had been promised for more than three years and was critical to improving the reliability of the Commando water system, where residents had repeatedly endured prolonged outages.

“The Eikenhof project is not a nice-to-have. It is an essential service and should be prioritised,” she said.

The Eikenhof pumping station supplies almost the entire western side of Johannesburg, including Soweto, Randburg, and Roodepoort. She said fragile gravity-fed reservoirs in the Commando system, including Hursthill 1 and Hursthill 2, relied on a stable supply from Eikenhof before they could refill and distribute water.

“This is why areas like Coronationville, Melville, Jan Hofmeyer and Westbury, including public healthcare facilities in those areas, have experienced serious water supply problems over the past five years,” she said.

“It is guaranteed that water disruptions will occur if Eikenhof is not upgraded,” she said.

She said the deferment undermined turnaround strategies previously adopted by both City Power and Johannesburg Water and warned that other investments in the water network would have limited impact if the Eikenhof upgrade were not completed.