Parliament warns R110bn-plus municipal debt to Eskom risks reversing utility’s recovery

Parliament says municipal electricity debt owed to Eskom has risen to more than R110 billion, prompting calls for urgent coordinated government action to stabilise strained municipalities and protect the power utility’s recovery.

Alarm raised after new debt figures

The Portfolio Committees on Cooperative Governance and Traditional Affairs (COGTA) and Electricity and Energy expressed concern after briefings from the Department of Electricity and Energy, Eskom, the Department of Cooperative Governance and Traditional Affairs, the South African Local Government Association, and National Treasury.

Committee members said municipal debt to Eskom has increased from a previously reported R89 billion to more than R110 billion. They warned this sharp rise could reverse progress made in stabilising Eskom.

Calls for an inter-ministerial response

The committees backed the establishment of an inter-ministerial committee to coordinate a government-wide response aimed at addressing the growing debt burden.

“The multi-billion-rand debt municipalities owe to Eskom has the potential to reverse the positive gains Eskom has made in dealing with its operational and financial issues,”

said Ms Zama Khanyase, Chairperson of the Portfolio Committee on Electricity and Energy.

Khanyase noted that Eskom’s Distribution Agency Agreements (DAAs) were introduced as an intervention to improve revenue collection and strengthen municipal capacity.

“In an effort to arrest the ballooning debt, Eskom introduced the DAAs to improve revenue collection, build municipalities’ capacity to become more sustainable, and support them in providing a sustainable electricity supply,”

she said.

Fragmented actions blamed for deepening crisis

Dr Zweli Mkhize, Chairperson of the Portfolio Committee on Cooperative Governance and Traditional Affairs, said isolated departmental responses are failing to address the scale of the problem and urged cooperative, intergovernmental ownership of both the problem and the solution.

“The municipal electricity debt crisis calls for a coordinated government-wide response, not isolated actions by individual departments and institutions,”

Mkhize said. He added:

“From Eskom’s side, the message is ‘pay or else’. From the municipalities’ side, the message is ‘we cannot pay’. That kind of situation is a problem.”

Governance and revenue collection issues highlighted

The committees raised concern that many municipalities are themselves owed significant funds by electricity consumers, pointing to weak revenue collection, poor billing and governance breakdowns. They emphasised that municipalities must continue paying for current electricity consumption and improve financial controls, including updating indigent registers and strengthening credit management systems.

While noting that reviews such as the electricity pricing policy and a draft White Paper on Local Government are under way, Khanyase said immediate intervention is necessary.

“What is clear is that action is needed from both sides. Eskom and municipalities need to act in concert with each other and with government support. Without mutual understanding, the problem cannot be resolved,”

she said.

Next steps and oversight

The committees resolved that stakeholders must return within three months with concrete interventions, including a structured intergovernmental plan to address the debt, governance failures, revenue collection challenges and infrastructure pressures facing municipalities. Lawmakers will continue monitoring the implementation of the Distribution Agency Agreements as part of ongoing oversight.