JoburgCAN welcomes the implementation of financial ring-fencing at City Power from 1 October as a positive and necessary step towards restoring financial discipline and improving accountability at Johannesburg’s electricity utility but that ring-fencing on its own will not turn City Power around.
Under the new arrangement, 70% of electricity revenue collected on behalf of City Power will be transferred to the entity within 48 hours, while the City of Johannesburg will retain the remaining 30%.
The change should give City Power greater certainty over the revenue available to fund its operations, maintenance and infrastructure responsibilities.
JoburgCAN Managing Director Julia Fish said the City now needs to move quickly on three priorities.
“The first priority should be very simple: fully fund and operationalise the City Power turnaround strategy that Council already approved in July 2024.
“The strategy already identified many of the problems that continue to undermine the entity — including its management structure, weak cash collection, operational inefficiencies and the broader financial sustainability of City Power.
“The problem is that the operational and capital budgets allocated to City Power have not matched the commitments contained in that strategy. Johannesburg does not need another turnaround plan. It needs to fund and implement the one it already has.”
Fish said the second priority must be transparency around the new ring-fencing arrangement.
“Residents must be able to see how much electricity revenue is collected, how much is transferred to City Power, when those transfers are made, how much is paid to Eskom and how much is being spent on maintenance and infrastructure.
“Ring-fencing must not become an accounting exercise that happens behind closed doors.”
City Power itself has said the new arrangement is intended to strengthen the link between the revenue generated by the electricity business, the resources available to operate it and the entity’s accountability for the service it provides.
JoburgCAN believes that accountability must be visible and measurable.
The third priority is to set clear delivery targets for billing, cash collection, technical capacity and infrastructure maintenance, and report publicly against those targets.
“City Power cannot become financially sustainable if it does not improve billing accuracy, collect legitimate debt, rebuild its technical capacity and maintain the network properly,” Fish said.
“But debt collection also has to recognise that some households simply cannot afford the full cost of basic services.
“The equitable share is intended to help municipalities subsidise services for indigent households. Those allocations must be properly identified, protected and transferred through to the utilities that are actually providing the service.
“A legitimate and expanded indigent register, linked to the correct grant allocation, would help relieve pressure on City Power’s debtors book while ensuring that support reaches households that genuinely need it.
“At the same time, the City must pursue customers who can afford to pay but choose not to, while protecting residents with legitimate billing disputes and indigent households who qualify for assistance.”
Fish said residents ultimately need to see measurable progress.
“Residents need to see measurable improvement, not just new financial arrangements and policy announcements.
“Ring-fencing is a positive development, but it must be followed by proper funding, transparent reporting, a credible indigent support system and accountable implementation. That is what will determine whether this becomes a genuine turnaround or simply another reform that looks good on paper.”
For media enquiries contact Jonathan on 073 227 6075.