The City of Johannesburg approved a R3.8 billion concessional loan from German development bank KfW on Wednesday to settle most of its R5.2 billion arrears to power utility Eskom, ending a fourteen-month standoff that had repeatedly threatened load curtailment in South Africa's commercial capital. Electricity minister Kgosientsho Ramokgopa and mayor Dada Morero said a formal partnership agreement would be unveiled next week.
The KfW loan, brokered through National Treasury and indexed to a long-tenor euro-denominated instrument, comes with concessional pricing of roughly two hundred basis points below Johannesburg's domestic borrowing curve and a fifteen-year tenor. The deal is contingent on the city implementing a series of governance reforms agreed with Treasury, including replacing the chief financial officer and consolidating the existing four-utility billing system into a single platform by March 2027.
But the Eskom debt is only a fraction of the city's broader arrears. Finance minister Enoch Godongwana, in a scathing letter to mayor Morero made public on Tuesday, said Johannesburg owed creditors a combined R25.2 billion against cash and equivalents of just R3.9 billion. He warned the city's budget was unfunded, that it was in "severe financial distress," and that further central-government intervention would follow if Johannesburg did not adopt a credible recovery framework.
The largest single creditor outside Eskom is Rand Water, which Johannesburg owes R12.6 billion in unpaid bulk water charges. The utility has suspended discretionary infrastructure investment in the city since February, including a long-planned upgrade of the Klipfontein water treatment works that South Africa's national water department had been counting on to meet 2027 demand projections.
Johannesburg's financial deterioration has come despite a national consumer-inflation reading of 4.0 per cent in April — up from 3.1 per cent in March — that has otherwise begun to stabilise. The national trade surplus for the first quarter trebled year-on-year to R77 billion, driven by precious-metals exports, and the rand has rallied roughly four per cent against the dollar since March.
Morero, who replaced Kabelo Gwamanda last year, has said he intends to ask the Gauteng provincial government for a one-off recapitalisation while the KfW reform plan is implemented. The provincial government has not formally responded, but premier Panyaza Lesufi said separately that no province had ever recapitalised a metropolitan municipality before and that any such request would require national Treasury sign-off.