Parliament's Portfolio Committees on Cooperative Governance and Traditional Affairs and on Electricity and Energy have thrown their weight behind the creation of an inter-ministerial committee to address the growing crisis of financially distressed municipalities, particularly those burdened by escalating debt to Eskom.
The call emerged during a joint committee meeting on Wednesday, 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.
The committees expressed concern over the worsening municipal debt owed to Eskom, which has now exceeded R110 billion, up from R89 billion reported at a previous meeting.
Portfolio Committee on Electricity and Energy Chairperson Zama Khanyase warned that the mounting debt threatens to undermine the progress Eskom has made in stabilising its operations and finances.
"Eskom introduced Distribution Agency Agreements to improve revenue collection, strengthen municipal capacity and support a sustainable electricity supply," Khanyase said.
However, committee members acknowledged that the agreements alone would not solve the problem.
Portfolio Committee on Cooperative Governance and Traditional Affairs Chairperson Zweli Mkhize said the crisis required a coordinated response across government rather than isolated interventions by individual departments or institutions.
"The municipal electricity debt crisis calls for a government-wide response. The inter-ministerial committee must deal with the complexities of the current debt, correct governance failures and address corruption and dysfunction,” he said.
Mkhize noted that some municipalities face structural challenges that make financial recovery difficult, including weak revenue bases and limited economic activity.
"We need to face the reality that some municipalities are in situations where they cannot resolve these issues on their own," Mkhize said.
He stressed the importance of cooperation among all stakeholders, warning against adversarial positions between Eskom and municipalities.
"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. We need intergovernmental and cooperative ownership of both the problem and the solution."
Members emphasised that while municipalities have constitutional authority over electricity reticulation, this authority cannot be used to justify poor performance or the diversion of funds intended for electricity services.
The committees highlighted several areas requiring urgent attention, including improving municipal billing systems, strengthening revenue collection, updating indigent registers, safeguarding free basic electricity allocations and enhancing credit control measures.
Concern was also raised about municipalities' inability to collect payments from consumers, a factor contributing to their growing debt burden to Eskom.
Khanyase said policy reform processes currently under way, including the review of the electricity pricing policy and the draft White Paper on Local Government, were important but would take time to yield results.
"What is clear is that action is needed from both sides," she said. "Eskom and municipalities need to act in concert with each other and with government support. Without mutual understanding, the problem cannot be resolved."
The committees resolved to continue monitoring the implementation of Distribution Agency Agreements and municipal performance.
They have instructed relevant stakeholders to return within three months with concrete interventions, including an intergovernmental action plan that addresses debt, revenue collection, governance weaknesses and infrastructure challenges. – SAnews.gov.za
