Thirty percent off the top is not ringfencing
From 1 October City Power is ‘ringfenced’: Johannesburg keeps 30% of electricity cash first; the utility gets 70% and still carries Eskom, losses, and a R44bn backlog.
From 1 October 2026, Johannesburg’s electricity distributor is officially “ringfenced.” Read the letter carefully, and the City still collects every rand of electricity revenue, keeps 30% off the top within 48 hours, and passes the remaining 70% to City Power. That is not ringfencing. It is a first charge by the shareholder on the gross cash of a company that already cannot cover its costs.
Chris Yelland in Daily Maverick (30 September), drawing on CDE’s Powering Joburg’s Turnaround, puts the arithmetic on the table. For a typical municipal distributor, bulk purchases from Eskom are about 70% of operating costs — so the slice left after the City’s take has to stretch across Eskom, technical and non-technical losses, staff, maintenance, finance, and network renewal. City Power’s overdraft with the City reportedly grew from about R10bn in mid-2023 to about R19.1bn by March 2026; the infrastructure backlog is put at R44.25bn. The failure is specific: the City gets certainty; the utility carries the risk; customers get longer outages.
Treasury’s Metro Trading Services Reform is meant to do the opposite — ringfence water, electricity, and waste revenues so trading services can reinvest rather than cross-subsidise everything else (Business Day, 30 September). A flat, unexplained 30% levy off the top line does not meet that test. Real ringfencing pays bulk supply, operations, and asset renewal first; social obligations are transparent and budgeted; only a true surplus goes to the shareholder.
That is the live debate under NERSA Municipal Tariff Rationalization and Cost-Reflective Pricing: roughly 160 municipal distributors, weak enforcement of cost-reflectivity, and “ring-fenced” accounts that councils still treat as a rates piggy bank. Joburg can still choose a substantiated transfer City Power can afford — before the November election locks the wrong rule in. For the deeper frame on municipal utilities and state capability, see the textbook’s Chapter 3.