Cape town: Parliament's Portfolio Committees on Cooperative Governance and Traditional Affairs and on Electricity and Energy have endorsed the formation of an inter-ministerial committee aimed at tackling the escalating financial distress of municipalities, particularly those burdened by mounting debt to Eskom.
According to South African Government News Agency, the decision was made during a joint committee meeting where updates were provided by the Department of Electricity and Energy, Eskom, the Department of Cooperative Governance and Traditional Affairs (COGTA), the South African Local Government Association (Salga), and the National Treasury. The meeting focused on the implementation of Distribution Agency Agreements (DAAs) between Eskom and municipalities.
The committees expressed concern over the increasing municipal debt owed to Eskom, which has now surpassed R110 billion, up from R89 billion reported previously. Chairperson of the Portfolio Committee on Electricity and Energy, Zama Khanyase, highlighted that the growing debt poses a risk to Eskom's efforts to stabilise its operations and finances.
"Eskom introduced Distribution Agency Agreements to improve revenue collection, strengthen municipal capacity and support a sustainable electricity supply," Khanyase stated. However, committee members acknowledged that these agreements alone are insufficient to resolve the crisis.
Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs, Zweli Mkhize, emphasised the need for a coordinated government response rather than isolated interventions. Mkhize noted that some municipalities face structural challenges such as weak revenue bases and limited economic activity, complicating financial recovery efforts.
"The municipal electricity debt crisis calls for a government-wide response. The inter-ministerial committee must deal with the complexities of the current debt, correct governance failures and address corruption and dysfunction," Mkhize asserted. He stressed the importance of cooperation among stakeholders, warning against adversarial positions between Eskom and municipalities.
Committee members also highlighted the urgency of improving municipal billing systems, strengthening revenue collection, updating indigent registers, safeguarding free basic electricity allocations, and enhancing credit control measures. Concern was raised over municipalities' inability to collect payments from consumers, contributing to their growing debt to Eskom.
Khanyase noted that ongoing policy reform processes, including the review of the electricity pricing policy and the draft White Paper on Local Government, are important but require time to produce results. "What is clear is that action is needed from both sides," she said. "Eskom and municipalities need to act in concert with each other and with government support. Without mutual understanding, the problem cannot be resolved."
The committees have resolved to continue monitoring the implementation of Distribution Agency Agreements and municipal performance. They have instructed relevant stakeholders to return within three months with concrete interventions, including an intergovernmental action plan addressing debt, revenue collection, governance weaknesses, and infrastructure challenges.
