KEY POINTS
- Eskom has signed Distribution Agency Agreements to manage electricity billing and maintenance in three municipalities.
- The move targets municipalities struggling with massive debt and poor compliance with the national debt relief programme.
- Authorities say the arrangement is temporary and aimed at stabilising electricity operations and improving revenue collection
South Africa’s power utility Eskom will take over electricity billing and maintenance functions in three municipalities; Maluti-a-Phofung, Emfuleni, and Merafong, following the signing of Distribution Agency Agreements (DAAs).
The development was confirmed during a joint parliamentary meeting of the Portfolio Committees on Electricity and Energy and on Cooperative Governance and Traditional Affairs on Wednesday, 3 June 2026.
The municipalities are among several local governments struggling with compliance under the National Treasury’s Municipal Debt Relief Programme, which aims to address escalating municipal debt owed to Eskom.
Eskom revealed that municipal debt owed to the utility had reached about R114 billion by the end of March 2026, with many municipalities failing to meet conditions attached to the debt relief programme.
Out of the participating municipalities, 13 were issued compliance warning letters by the National Treasury due to repeated breaches of programme requirements.
While three municipalities have now entered formal agreements with Eskom, ten others have committed to completing legal Section 78 processes by September 2026 to remain eligible for debt relief support.
Section 78 procedures require municipalities to follow legal consultation steps before transferring electricity distribution and revenue collection responsibilities to Eskom under the DAA framework.
Temporary Management Arrangement, Not a Full Takeover
Eskom clarified that the Distribution Agency Agreements do not amount to a takeover of municipal electricity services.
Instead, the utility will act as an agent managing billing, maintenance, and revenue collection on behalf of municipalities while they retain their distribution licences.
The arrangement is expected to last for at least three years, during which Eskom will help stabilise local electricity operations and improve financial performance.
Support will also include infrastructure maintenance, staff training, tariff restructuring, and efforts to improve revenue collection systems.
South Africa’s Minister of Finance, Enoch Godongwana, has previously raised concerns about widespread non-compliance among municipalities participating in the debt relief programme.
He noted that 61 municipalities have consistently failed to meet key requirements, including cost-reflective tariff implementation, effective revenue collection, and enforcement of credit control measures.
The minister warned that simply increasing financial allocations to struggling municipalities would not solve underlying governance and operational problems.
Instead, affected municipalities are being offered the option of entering DAAs with Eskom, which would temporarily centralise electricity management while maintaining municipal ownership of distribution licences.
Under the agreements, Eskom is expected to strengthen revenue collection and reduce losses while ensuring more efficient electricity service delivery.
Government officials say the model will help address long-standing inefficiencies in municipal electricity management and reduce the growing debt burden on Eskom.
The utility has emphasised that the goal is to stabilise operations so that municipalities can eventually resume full control of their electricity systems after the agreement period ends.
