South Africa’s Deputy President, Paul Mashatile, has revealed the staggering extent of municipal debt to state power utility Eskom, with overdue amounts reaching R102 billion as of July 2025 – a five-fold increase from R20 billion in 2019.
Speaking in Parliament yesterday in response to questions from ActionSA’s Lerato Ngobeni about Tshwane Metropolitan Municipality’s recent debt settlement agreement, Mashatile warned that without urgent intervention, the debt could balloon to R300 billion by 2030.
The revelation comes as Tshwane earlier secured a landmark agreement with Eskom to settle its inherited R6.67 billion debt, with R1 billion already paid and interest waived over a five-year repayment plan.
In response to the crisis, the government has introduced the Distribution Agency Agreement (DAA), a mechanism that allows struggling municipalities to partner with Eskom for long-term sustainability. Under this arrangement, municipalities can appoint Eskom as a service delivery agent for their electricity distribution operations while retaining their distribution licenses.
“The DAA enables Eskom to collect revenue, manage operations, and maintain infrastructure on behalf of participating municipalities,” Mashatile explained, emphasising that participation remains voluntary.
The initiative includes skill transfer programs, operational reforms, and structured exit plans to eventually return distribution operations to municipalities once they meet competency benchmarks.
Two municipalities have already demonstrated the model’s effectiveness. Maluti-a-Phofung Municipality in the Free State and Emfuleni Local Municipality in Gauteng have “significantly reduced the debt of the worst-performing municipalities in electricity distribution,” according to the Deputy President.
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However, he cautioned that Tshwane’s debt settlement, achieved through court processes and litigation, “may not necessarily be replicated in other municipalities.”
The National Treasury is currently providing assistance to 71 municipalities through a Debt Relief Programme, which allows for partial write-offs of arrears for municipalities meeting strict financial management standards.
The Deputy President said that government, Eskom, business, and state institutions would continue supporting struggling municipalities to meet their financial obligations and improve service delivery.
