Municipal debt to Eskom exceeds R110bn, prompting parliamentary concern
Parliament has urged urgent intervention as financially distressed municipalities continue to struggle with revenue collection and electricity payments.
South Africa’s escalating municipal debt crisis has come under renewed scrutiny, with Parliament calling for urgent intervention as municipal debt owed to Eskom exceeds R110b.
The Portfolio Committees on Cooperative Governance and Traditional Affairs and on Electricity and Energy have supported the establishment of an inter-ministerial committee to address the growing number of financially distressed municipalities and their mounting electricity debt.
The call was made during a joint committee meeting where members received updates from 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 on the implementation of Distribution Agency Agreements (DAAs) between Eskom and municipalities.
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Committee members expressed concern over the sharp increase in municipal debt, which has risen from R89bn reported at a previous meeting to more than R110b.
Portfolio Committee on Electricity and Energy chairperson Zama Khanyase warned that the growing debt burden could undermine the progress Eskom has made in stabilising its operations and finances.
Khanyase said DAA were introduced to improve revenue collection, strengthen municipal capacity and support a sustainable electricity supply. However, members acknowledged that the agreements alone would not resolve the crisis.
Portfolio Committee on Cooperative Governance and Traditional Affairs chairperson Zweli Mkhize said the challenges facing municipalities require a coordinated government response rather than isolated interventions by individual institutions.
He said the proposed inter-ministerial committee should address not only municipal debt but also governance failures, corruption and operational dysfunction within local government.
Mkhize noted that some municipalities face structural challenges, including weak revenue bases and limited economic activity, making financial recovery increasingly difficult.
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“We need to face the reality that some municipalities are in situations where they cannot resolve these issues on their own,” said Mkhize.
He stressed the need for cooperation between municipalities, Eskom and government departments to find sustainable solutions.
Committee members also highlighted several areas requiring urgent attention, including improving municipal billing systems, strengthening revenue collection, updating indigent registers, protecting free basic electricity allocations and enhancing credit control measures.
Concern was also raised about municipalities’ inability to collect payments from consumers, a key factor contributing to rising debt levels.
While policy reforms, including the review of the electricity pricing policy and the draft White Paper on Local Government, are underway, Khanyase cautioned that these processes would take time to produce results.
She said meaningful progress would require Eskom, municipalities and government to work together to address the root causes of the crisis.
The committees resolved to continue monitoring the implementation of Distribution Agency Agreements and municipal performance.
Relevant stakeholders have been instructed to return within three months with concrete interventions, including an intergovernmental action plan aimed at addressing debt, governance weaknesses, revenue collection challenges and infrastructure constraints.
