KEY POINTS
- Four municipalities signed temporary electricity-management agreements with Eskom.
- Eskom will oversee revenue, training and network support while municipalities retain licences.
- AfriForum is challenging Merafong’s agreement, alleging legal and procedural violations.
Four municipalities in South Africa have entered into agreements allowing Eskom to take responsibility for managing their electricity distribution businesses, in a move aimed at addressing financial, operational and infrastructure challenges within the affected local authorities.
The municipalities; Ditsobotla, Emfuleni, Maluti-A-Phofung and Merafong, have signed Distribution Agency Agreements (DAAs) with Eskom, South Africa’s state-owned electricity utility.
However, Eskom stressed that the agreements do not amount to a permanent takeover of electricity services. Instead, the arrangements establish a temporary partnership under which Eskom manages the municipalities’ ring-fenced electricity operations on their behalf.
Under the DAAs, Eskom becomes the agent responsible for managing important aspects of the electricity businesses operated by the four municipalities.
The utility said the agreements are designed to help municipalities strengthen the financial and operational sustainability of their electricity businesses while addressing challenges that have affected service delivery.
Despite Eskom’s increased role, the municipalities will retain their electricity distribution licences. This means ownership and regulatory responsibility for electricity distribution remain with the municipalities, even though Eskom will manage the relevant electricity businesses under the agreements.
Eskom described the arrangement as a partnership rather than a full transfer of municipal electricity functions.
Eskom to Handle Revenue Collection and Network Support
As part of the agreements, Eskom will take on several responsibilities traditionally associated with the municipalities’ electricity operations.
These include collecting electricity revenue, supporting the training of municipal employees and conducting cost-to-serve studies to help determine the actual cost of providing electricity services.
Eskom will also assist with maintaining and strengthening electricity infrastructure, with the objective of ensuring that the networks serving residents and businesses remain resilient.
The utility said the arrangements are intended to provide municipalities with additional operational capacity while helping them put their electricity businesses on a more sustainable footing.
Eskom said DAAs are not intended to permanently replace municipal electricity distribution structures.
Instead, the agreements are time-bound and transitional arrangements designed to help municipalities stabilise and improve their ring-fenced electricity businesses.
The utility confirmed that four DAAs have currently been signed with Maluti-A-Phofung, Emfuleni, Ditsobotla and Merafong.
To coordinate the implementation of the agreements, Eskom has established a dedicated Project Management Office (PMO).
The PMO will work alongside each participating municipality through an integrated structure involving relevant stakeholders. Its role is to coordinate the implementation of the agreements and monitor progress towards the objectives established under each arrangement.
The development comes amid longstanding financial and operational problems affecting several municipalities across South Africa.
In November 2025, Eskom disclosed that 47 municipalities participating in its municipal debt relief programme were still in default.
At the time, Eskom said 24 municipalities had qualified for the first one-third write-off of their debt after successfully making payments for 12 consecutive months, while another 21 municipalities had generally maintained their payment commitments.
However, 47 municipalities remained in default.
