The Ngwathe Council during an urgent special council meeting on March 27, resolved to embark on a Section 78 process enabling the municipality to fulfil legislative requirements necessary to enter into a DAA ( Distribution Agency Agreement) with Eskom. This will include a process of public participation.

The municipality has till end of August, to finalise all legislative requirements. A DAA can then be signed once this is achieved, Eskom and the municipal manager, Dr. F.P Mothamaha confirmed.
Friday’s Council meeting was also attended by representatives of Eskom, SALGA (South African Local Government Association) and CoGTA (Department of Cooperative Governance and Traditional Affairs) with noteable contributions made by SALGA who also represented National Treasury.

When a DAA is concluded between Eskom and a municipality, Eskom is appointed under the municipality’s Distribution Licence as an agent to perform all functions and services relating to the municipality’s electricity business on behalf of the municipality. There is no transfer of the municipality’s Distribution Licence nor takeover by Eskom of the municipality’s customers.

Asked to give clarity on National Treasury’s request to Eskom to redraft the agreement as it believes that in its current format, the agreement favours the power utility, Eskom told Gazette, stakeholders provided inputs on the DAA which Eskom is currently considering. The power utility however gave the assurance that the changes will ensure that the DAA is aligned with legislative requirements but does not represent major changes on the content of the DAA itself.

Once a DAA is concluded the municipality is obliged and expected to pay current accounts in full under the DAA. Eskom will be responsible for the collection of revenue to be distributed according to the merit order.

Besides the DAA signed between Eskom and Maluti-A-Phofung on May 31, 2023 as a result of a court order, there is no subsequent DAA that has been signed so far by a municipality in the Free State.

Ngwathe was one of 13 defaulting municipalities for which Eskom had earlier, as part of its public participation process, issued notices of its intention to interrupt or reduce bulk electricity supply by May 8, should the municipalities fail to comply with conditions set in the notices.

The notice made it clear, should Council not agree to concluding a DAA agreement with the power utility by March 27, the only other option is for Eskom to convert the municipality’s electricity supply to prepaid electricity—where Eskom will only supply power equivalent to what the municipality can afford—or an agreement between Ngwathe and Eskom in terms of which municipal consumers pay Eskom directly for their electricity consumption.

Ngwathe has recently intensified action against defaulters and illegal electricity connections, but is fighting a constant battle against electricity theft.

Despite repeated attempts to intervene in Ngwathe’s Eskom debt in the past, it has accumulated over the years since 2009 to a staggering R2 927 900 635.

With winter coming up, Parys residents once again will have to face electricity supply challenges when the demand for electricity traditionally exceeds supply. However, councillors and municipal management were confident that the resolution taken will eventually pay fruit, with the possibility of debt write-offs over the contracted term.