MPs Back National Plan to Tackle Eskom Debt Crisis

Committee members expressed alarm at the sharp rise in municipal debt owed to Eskom, which has now exceeded R110 billion, compared to R89 billion reported during an earlier engagement.

South Africa's Parliament has thrown its support behind the creation of an inter-ministerial committee to address the growing financial crisis facing municipalities, particularly the escalating debt owed to Eskom.

The call emerged during a joint meeting of Parliament's Portfolio Committees on Cooperative Governance and Traditional Affairs and on Electricity and Energy. 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 efforts to improve electricity revenue collection through Distribution Agency Agreements (DAAs).

Committee members expressed alarm at the sharp rise in municipal debt owed to Eskom, which has now exceeded R110 billion, compared to R89 billion reported during an earlier engagement. Lawmakers warned that the growing debt burden poses a serious threat to Eskom's financial recovery and the stability of the country's electricity sector.

Committees Call for Coordinated Government Response

Portfolio Committee on Electricity and Energy Chairperson Zama Khanyase said Distribution Agency Agreements were introduced to improve revenue collection, strengthen municipal capabilities and support sustainable electricity supply systems. However, she acknowledged that the agreements alone would not solve the deeper structural problems affecting municipalities.

Portfolio Committee on Cooperative Governance and Traditional Affairs Chairperson Zweli Mkhize argued that the crisis requires a coordinated response involving multiple government departments and institutions rather than isolated interventions. He pointed out that many municipalities are struggling with weak local economies, shrinking revenue bases and governance challenges that make financial recovery difficult. According to Mkhize, some municipalities simply lack the capacity to resolve these problems without additional support.

Committee members stressed that cooperation between Eskom and municipalities is essential, warning that a confrontational approach would only deepen the crisis. They noted that municipalities have constitutional responsibilities for electricity distribution but cannot use those powers to justify poor financial management or the misuse of funds intended for electricity services.

Revenue Collection and Governance Under Spotlight

The committees identified several urgent areas requiring intervention, including improvements to municipal billing systems, stronger revenue collection mechanisms, updated indigent registers and better protection of free basic electricity allocations for vulnerable households.

Members also highlighted the inability of many municipalities to collect payments from consumers, describing it as one of the main drivers of the escalating debt owed to Eskom. Khanyase acknowledged that ongoing policy reforms, including the review of the electricity pricing policy and the draft White Paper on Local Government, could contribute to long-term solutions. However, she cautioned that these reforms would take time to produce measurable results.

The committees agreed that immediate action is needed from all parties. They resolved to continue monitoring the implementation of Distribution Agency Agreements and municipal performance closely. Stakeholders have been instructed to return within three months with concrete proposals, including a comprehensive intergovernmental action plan addressing debt recovery, revenue collection, governance failures and infrastructure challenges. Lawmakers believe such a coordinated strategy will be critical to preventing further deterioration in municipal finances and ensuring a sustainable electricity supply system across the country.