Eskom Takes Hands-On Role to Tackle R95.4 Billion Municipal Debt Crisis

South Africa’s municipal debt to Eskom has reached a staggering R95.4 billion as of November 2024, with projections indicating it could rise to R110 billion by March 2025. In response to this growing crisis, the Ministry of Electricity and Energy has introduced an “active partnering framework” that empowers Eskom to assist municipalities in managing their electricity distribution businesses. This initiative aims to improve revenue collection, infrastructure maintenance, and overall service delivery while ensuring public ownership of electricity distribution.

The Active Partnering Framework

Under the leadership of Electricity and Energy Minister Kgosientsho Ramokgopa, Eskom will take a hands-on role in helping municipalities address their financial and operational challenges. The framework includes:

• Billing and Revenue Collection: Eskom will assist municipalities with accurate billing and efficient revenue collection to reduce arrears.
• Infrastructure Maintenance: Eskom will oversee the maintenance and repair of electricity infrastructure to minimize outages and improve service reliability.
• Reticulation Services: Eskom will manage the distribution of electricity to ensure consistent supply to consumers.

A key element of the framework is the separation of municipal electricity accounts from other municipal finances. This ensures that electricity revenue is not misallocated and is used exclusively for electricity-related expenses. Customers will pay their electricity bills into controlled, audited bank accounts, with Eskom collecting revenue on behalf of municipalities to ensure transparency and accountability.

Success in Maluti-a-Phofung

The active partnering model has already shown promising results in the Maluti-a-Phofung Municipality in the Free State, which was once one of the worst-performing municipalities in electricity distribution. Before the intervention, the municipality faced massive arrears, severe infrastructure neglect, and rampant electricity theft, with over 60% of customers consuming electricity illegally.

Since implementing the active partnering approach, Eskom has helped the municipality recover R2 billion in outstanding payments, reduce illegal connections, and improve infrastructure stability. Revenue from paying customers now funds infrastructure upgrades, reducing reliance on grants and ensuring the municipality no longer adds to its Eskom arrears.

Expansion to Other Municipalities

Building on this success, the Ministry of Electricity and Energy is expanding the Active Partnering Programme to other struggling municipalities. The program has already been rolled out in Limpopo municipalities such as Modimolle-Mookgophong, Thabazimbi, and Bela Bela, with “qualitative improvements” reported.

Immediate expansion plans include Ditsobotla Local Municipality in North West province and Tokologo Local Municipality in the Free State. The ministry is also collaborating with the Department of Cooperative Governance and Traditional Affairs (Cogta) and the South African Local Government Association (Salga) to identify additional municipalities for the program.

Addressing Illegal Connections

Illegal connections remain a significant challenge, contributing to revenue losses and infrastructure damage. To address this, Eskom has implemented measures to protect its staff while removing illegal connections. Security contracts have been established to escort Eskom employees in high-risk areas, and the South African Police Service (Saps) has been engaged to provide additional support.

Ramokgopa explained that areas with illegal connections are scanned for risks before deploying Eskom teams. Once a customer pays their tamper fine, a work request is created to reconnect them, with these requests tracked through the work management lifecycle until reconnection is completed.

The active partnering framework represents a proactive approach to addressing South Africa’s municipal debt crisis and improving electricity service delivery. By leveraging Eskom’s expertise and resources, the government aims to stabilize municipal finances, reduce electricity theft, and ensure reliable power supply for all citizens.

As the program expands to more municipalities, it offers hope for a more sustainable and efficient electricity distribution system, ultimately benefiting both municipalities and their residents.

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