- Municipal debt owed to Eskom has surged past R110 billion, up from R89 billion previously reported.
- Lawmakers support the establishment of an inter ministerial committee to tackle debt, governance failures and corruption across struggling municipalities.
- Stakeholders have been instructed to return within three months with a coordinated action plan to address debt recovery, revenue collection and infrastructure challenges.
South Africa’s Portfolio Committees on Cooperative Governance and Traditional Affairs and on Electricity and Energy have endorsed the establishment of an inter ministerial committee to address the escalating financial crisis facing municipalities, particularly those struggling with mounting debt owed to Eskom.
The decision followed a joint committee meeting where members received progress reports from the Department of Electricity and Energy, Eskom, the Department of Cooperative Governance and Traditional Affairs, the South African Local Government Association and National Treasury on the implementation of Distribution Agency Agreements between Eskom and municipalities.
Lawmakers expressed concern over the rapid growth in municipal debt, which has now exceeded R110 billion, compared with R89 billion reported at an earlier meeting. The committees warned that the worsening debt burden poses a significant risk to Eskom’s ongoing efforts to improve operational performance and restore financial stability.
Chairperson of the Portfolio Committee on Electricity and Energy, Zama Khanyase, said Eskom introduced Distribution Agency Agreements as a mechanism to strengthen municipal revenue collection, improve operational capacity and support a more sustainable electricity supply sector.
However, committee members agreed that the agreements alone will not be sufficient to resolve the crisis.
Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs, Zweli Mkhize, said the scale and complexity of the challenge requires a coordinated response across all spheres of government rather than isolated interventions by individual institutions.
According to Mkhize, the proposed inter ministerial committee must address the underlying causes of the debt crisis, including governance failures, corruption and operational dysfunction within municipalities.
He noted that several municipalities face structural economic challenges, including weak revenue bases and limited local economic activity, making financial recovery increasingly difficult without external support.
Committee members also stressed the need for greater cooperation between Eskom and municipalities. They cautioned that entrenched positions on both sides could hinder progress towards a sustainable solution.
The committees reiterated that while municipalities retain constitutional authority over electricity reticulation, this mandate cannot be used to justify poor financial management or the diversion of funds intended for electricity services.
Key priority areas identified during the meeting include improving municipal billing systems, strengthening revenue collection processes, updating indigent registers, protecting free basic electricity allocations and enhancing credit control measures. Members also highlighted the growing inability of municipalities to collect payments from consumers as a major contributor to rising debt levels.
Khanyase acknowledged that broader policy reforms, including the review of South Africa’s electricity pricing policy and the draft White Paper on Local Government, are expected to support long term improvements. However, she warned that these processes will take time to deliver tangible results.
The committees concluded that urgent action is required from Eskom, municipalities and national government to prevent the crisis from worsening.
As part of their oversight role, the committees will continue monitoring the implementation of Distribution Agency Agreements and municipal performance. Relevant stakeholders have been directed to return within three months with a detailed intergovernmental action plan outlining measures to address debt recovery, strengthen governance, improve revenue collection and accelerate investment in critical electricity infrastructure.
Author: Bryan Groenendaal
