Summary
Municipalities have been presented with relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023. Overall, municipalities owe Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief. Only 14 of the 72 municipalities that have applied for debt relief from the government have complied with the conditions outlined by the National Treasury programme that was announced by Finance Minister Enoch Godongwana in February during his budget speech. The municipal debt relief programme promises to benefit both Eskom and the municipalities by making their balance sheets more attractive to investors. The scheme permits a three-year write-off of all debt owed to Eskom as of 31 March 2023, including interest and penalties.
View DetailsIs it working?
Not effective:Eskom CFO Calib Cassim recently disclosed that the company's financial sustainability is in jeopardy due to the fact that municipal debt has increased to R85bn since March 2023 and is nearly at R90bn as of November 2024.
Actions
Numerous municipalities have applied for the Eskom debt relief programme.
Are there plans?
National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme.
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, National Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443bn as of the end of September 2023. As a result, NT launched a debt relief programme for municipalities
Goals
To provide debt relief for municipalities that adhere to conditions set by National Treasury.
Documents
Summary
Municipalities have been presented with relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023 and in guidelines published in MFMA Circular 124. At the time, municipalities owed Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief. However, as of the February 2025 budget, 80% of the municipalities that applied in terms of the scheme have not taken any steps to comply with the schemes requirements and risk being kicked out of it to be subject to Eskom debt collection processes.
View DetailsIs it working?
Not effective. Municipal debt has continued to increase to almost double the amount when the scheme was put in place. Eskom has proposed taking over the debt collection in the municipalities from consumers. This would be done through distribution agency agreements (DAAs), which would allow Eskom to handle metering, billing and revenue collection, while municipalities retain the authority to set tariffs. Unions say they will fight Eskom’s plan to take over distribution in failed municipalities.
Actions
While the programme has been put in place and municipalities applied to participate in it, as of February 2025, 80% of those who applied have failed to implement the requirements of the scheme and were at risk of being kicked out of it.
Are there plans?
National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme in the 2023 MFMA circular. As of end of 2023 municipalties representing 97% of the municipal debt owed to Eskom had applied in terms of the scheme.
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, National Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443bn as of the end of September 2023. As a result, NT launched a debt relief programme for municipalities.
Goals
Muncipalities owe Eskom roughly R100bnwhich is a serious impediment to Eskom's financial sustainability. The goal of the workout strategy is to turn around the payment performance of municipalities, ultimately assisting Eskom to restore its financial sustainability.
Documents
Summary
Municipalities have been presented with relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023 and in guidelines published in MFMA Circular 124. At the time, municipalities owed Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief. However, as of the February 2025 budget, 80% of the municipalities that applied in terms of the scheme have not taken any steps to comply with the schemes requirements and risk being kicked out of it to be subject to Eskom debt collection processes.
View DetailsIs it working?
Not effective. Municipal debt has continued to increase to almost double the amount when the scheme was put in place. Eskom has proposed taking over the debt collection in the municipalities from consumers. This would be done through distribution agency agreements (DAAs), which would allow Eskom to handle metering, billing and revenue collection, while municipalities retain the authority to set tariffs. Unions say they will fight Eskom’s plan to take over distribution in failed municipalities.
Actions
While the programme has been put in place and municipalities applied to participate in it, as of February 2025, 80% of those who applied have failed to implement the requirements of the scheme and were at risk of being kicked out of it.
Are there plans?
National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme in the 2023 MFMA circular. As of end of 2023 municipalties representing 97% of the municipal debt owed to Eskom had applied in terms of the scheme.
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, National Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443bn as of the end of September 2023. As a result, NT launched a debt relief programme for municipalities.
Goals
Muncipalities owe Eskom roughly R100bnwhich is a serious impediment to Eskom's financial sustainability. The goal of the workout strategy is to turn around the payment performance of municipalities, ultimately assisting Eskom to restore its financial sustainability.
Documents
Summary
Municipal debt owed to Eskom was at R105bn as of November 2025. National Treasury's 2023 debt relief programme to deal with municipalities' outstanding debt to Eskom has failed. Of the 71 municipalities that signed up for the programme, only 11 could meet conditions for a debt write-off. An alternative arrangement, distribution agency agreements (DAAs), are now being considered to reduce future arrears. These DAAs are an interim solution and will see Eskom manage the electricity service delivery, billing and collections on behalf of the municipalities, which will retain their electricity reticulation licences. A long-term solution, Electricity Distribution Industry (EDI) reform is still in the works and being led by Operation Vulindlela. EDI reform is set to put all municipalities on a financially sustainable path.
View DetailsIs it working?
Treasury's debt relief programme was not as effective as hoped; of the 71 municipalities that signed up for it, only 11 met conditions for a debt write-off.Municipal debt has continued to increase to almost double the amount when the scheme was put in place. This has prompted Eskom to consider DAAs as an interim solution while a more long-term solution for municipal sustainability and stability is led by Operation Vulindlela.
Actions
Cabinet has endorsed DAAs as an interim solution to stabilise cashflows, improve payment discipline, reduce losses and ensure sustainable service delivery in municipalities.A circular must be issued mandating 14 municipalities to enter into DAAs. Failure to sign the DAAs will require a harsher Promotion of Administrative Justice Act (PAJA) process, with the risk of municipalities having their licences revoked.Work is under way for a long-term EDI reform solution led by Operation Vulindlela and includes input from other stakeholders like the South African Local Government Association, the Association of Municipal Electricity Utilities, Eskom, the South African National Energy Development Institute and the Department of Electricity and Energy (DoEE).The National Energy Crisis Committee (Necom) has drafted an EDI reform paper, to be issued for public comment by March 2026 - and will set out clear steps for municipalities to achieve financial stability and sustainability.
Are there plans?
National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme in the 2023 MFMA circular, but only 11 municipalities could meet the conditions. Now Eskom is working to implement DAAs with 14 municipalities to reduce future arrears.
rnAn EDI reform paper has been drafted by Necom, which sets out three pathways for stabilisation.
rnThe updated white paper on local government, set for release in March/April 2026, will also address municipal issues concerning efficiencies, accountability and service delivery, which would also affect reform of the sector.
rnTreasury has also embarked on a metro trading services reform programme which introduces incentives for improved performance, which will also likely influence actions in metros to reduce electricity debt.
Is it on the agenda?
A number of plans are on the go to improve municipal financial stability and sustainability, specifically to reduce municipal debt to Eskom. Future interventions will be articulated in the white paper for local government to be released in early 2026 and the EDI reform roadmap, also due to be finalised next year.
Goals
Municipalities owe Eskom roughly R105bn which is a serious impediment to Eskom's financial sustainability. The goal of the workout strategy is to turn around the payment performance of municipalities, ultimately assisting Eskom to restore its financial sustainability.
Documents
Summary
Municipalities are set to get some sort of relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023. Overall, municipalities owe Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief programme that was announced by Finance Minister Enoch Godogwana in February during his budget speech. The municipal debt relief programme promises to benefit both Eskom and the municipalities by making their balance sheets less objectionable to investors. The scheme permits a three-year write-off of all debt owed to Eskom as of 31 March 2023, including interest and penalties.
View DetailsIs it working?
Somewhat effective- By December 2023, 72 applications had been submitted, totalling R56.7bn or 96.9 % of total municipal debt owed to Eskom at the end of March 2023.70 applications totalling R55.2 bn had been approved as of January 2024, however most recently, Eskom reported that by 29 February 2024 total arrears owing by municipalities had risen to R74.52 bn, well exceeding an earlier estimate of R68 bn by the end of March 2024.
Actions
NT opening up applications for debt relief
Are there plans?
The national treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, the Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443 bn as of the end of September 2023. As a result, NT launched a debt relief programme for municicipalities
Goals
At least 70 municipalities have applied for and been approved for the Eskom debt relief programme introduced by National Treasury in 2023.
Documents
Summary
Municipalities are set to get some sort of relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023. Overall, municipalities owe Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief programme that was announced by Finance Minister Enoch Godongwana in February during his budget speech. The municipal debt relief programme promises to benefit both Eskom and the municipalities by making their balance sheets more attractive to investors. The scheme permits a three-year write-off of all debt owed to Eskom as of 31 March 2023, including interest and penalties.
View DetailsIs it working?
Somewhat effective: by December 2023, 72 applications had been submitted, totalling R56.7bn or 96.9 % of total municipal debt owed to Eskom at the end of March 2023. Seventy applications totalling R55.2bn had been approved as of January 2024. However, Eskom subsequently reported that by 29 February 2024, total arrears owing by municipalities had risen to R74.52bn, well exceeding an earlier estimate of R6bn by end-March 2024.
Actions
At least 70 municipalities have applied for and have been approved for the Eskom debt relief programme.
Are there plans?
The National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme.
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, National Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443bn as of the end of September 2023. As a result, NT launched a debt relief programme for municipalities
Goals
To provide debt relief for municipalities that adhere to conditions set by National Treasury.
Documents
Summary
Municipalities have been presented with relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023. Overall, municipalities owe Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief. Only 14 of the 72 municipalities that have applied for debt relief from the government have complied with the conditions outlined by the National Treasury programme that was announced by Finance Minister Enoch Godongwana in February during his budget speech. The municipal debt relief programme promises to benefit both Eskom and the municipalities by making their balance sheets more attractive to investors. The scheme permits a three-year write-off of all debt owed to Eskom as of 31 March 2023, including interest and penalties.
View DetailsIs it working?
Not effective:Eskom CFO Calib Cassim recently disclosed that the company's financial sustainability is in jeopardy due to the fact that municipal debt has increased to R85bn since March 2023 and is nearly at R90bn as of November 2024.
Actions
Numerous municipalities have applied for the Eskom debt relief programme.
Are there plans?
National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme.
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, National Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443bn as of the end of September 2023. As a result, NT launched a debt relief programme for municipalities
Goals
To provide debt relief for municipalities that adhere to conditions set by National Treasury.
Documents
Summary
Municipalities have been presented with relief from the Eskom debt repayments following National Treasury’s decision to write off some municipal debt over a period of three years, but they must work for this relief by adhering to the strict conditions set by NT. This decision was announced at a media workshop hosted by NT on 2 May 2023. Overall, municipalities owe Eskom close to R57bn and this is seen as a material risk to the Eskom debt relief. Only 14 of the 72 municipalities that have applied for debt relief from the government have complied with the conditions outlined by the National Treasury programme that was announced by Finance Minister Enoch Godongwana in February during his budget speech. The municipal debt relief programme promises to benefit both Eskom and the municipalities by making their balance sheets more attractive to investors. The scheme permits a three-year write-off of all debt owed to Eskom as of 31 March 2023, including interest and penalties.
View DetailsIs it working?
Not effective:Eskom CFO Calib Cassim recently disclosed that the company's financial sustainability is in jeopardy due to the fact that municipal debt has increased to R85bn since March 2023 and is nearly at R90bn as of November 2024.
Actions
Numerous municipalities have applied for the Eskom debt relief programme.
Are there plans?
National Treasury has set out 10 conditions that municipalities need to adhere to in order to qualify for the debt relief programme.
Is it on the agenda?
When it launched the three-year, R254bn Eskom debt relief package in 2023, National Treasury cited mounting municipal debt as a major danger to the effectiveness of the bailout in addressing the state-owned power company's financial issues, with its total debt standing at R443bn as of the end of September 2023. As a result, NT launched a debt relief programme for municipalities
Goals
To provide debt relief for municipalities that adhere to conditions set by National Treasury.
Documents