Shift to a utility model for water and electricity services to ensure financial and operational sustainability
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Individual Reform: Shift to a utility model for water and electricity services to ensure financial and operational sustainability 2026 - 2027

Implement the trading services reform programme to create professionally managed utilities in all metros.

No data available for the deliverable: Implement the trading services reform programme to create professionally managed utilities in all metros.

No data available for the deliverable: Implement the trading services reform programme to create professionally managed utilities in all metros.

No data available for the deliverable: Implement the trading services reform programme to create professionally managed utilities in all metros.

No data available for the deliverable: Implement the trading services reform programme to create professionally managed utilities in all metros.

No data available for the deliverable: Implement the trading services reform programme to create professionally managed utilities in all metros.

Summary

National Treasury anticipates that a performance-based incentive for metro trading services infrastructure investments will be developed by 2026. National Treasury (and likely Eskom and DWS) will be driving this initiative. In this model, trading services are managed and delivered by dedicated, professional utilities (or ring-fenced utilities), which can be structured as separate business units within municipalities or private companies operating under concessions. This separation is intended to create clear accountability and professional management of utilities.

Canvas not supported.

Is it working?

Early stages, too early to assess impact.

Actions

Operation Vulindlela has indicated that some metros (six) have finalised and submitted performance improvement action plans as part of the Metro Trading Services Reform Programme to National Treasury, focusing on turning around their water and electricity utilities.

Are there plans?

The plan is to implement this at targeted municipalities that need to submit performance improvement plans.

Is it on the agenda?

Falls under the Operation Vulindlela Phase 2 agenda.

Goals

A trading services reform programme for metropolitan municipalities aims to enhance the financial and operational efficiency of municipal trading services, particularly in the water and electricity sectors.

Documents

Departments / Govt Institutions

Department of Cooperative Governance and Traditional Affairs National Treasury

Summary

National Treasury anticipates that a performance-based incentive for metro trading services infrastructure investments will be developed by 2026. National Treasury (and likely Eskom and DWS) will be driving this initiative. In this model, trading services are managed and delivered by dedicated, professional utilities (or ring-fenced utilities), which can be structured as separate business units within municipalities or private companies operating under concessions. This separation is intended to create clear accountability and professional management of utilities.

Canvas not supported.

Is it working?

Early stages, too early to assess impact.

Actions

Operation Vulindlela has indicated that some metros (six) have finalised and submitted performance improvement action plans as part of the Metro Trading Services Reform Programme to National Treasury, focusing on turning around their water and electricity utilities.

Are there plans?

The plan is to implement this at targeted municipalities that need to submit performance improvement plans.

Is it on the agenda?

Falls under the Operation Vulindlela Phase 2 agenda.

Goals

A trading services reform programme for metropolitan municipalities aims to enhance the financial and operational efficiency of municipal trading services, particularly in the water and electricity sectors.

Documents

Departments / Govt Institutions

Department of Cooperative Governance and Traditional Affairs National Treasury

Summary

National Treasury anticipates that a performance-based incentive for metro trading services infrastructure investments will be developed by 2026. National Treasury (and likely Eskom and DWS) will be driving this initiative. In this model, trading services are managed and delivered by dedicated, professional utilities (or ring-fenced utilities), which can be structured as separate business units within municipalities or private companies operating under concessions. This separation is intended to create clear accountability and professional management of utilities.

The February 2026/27 Budget proposed that if municipal capacity to spend becomes a problem, the funds being lost would be transferred to entities such as the Development Bank of South Africa and the Municipal Infrastructure Support Agent.

On 18 March, National Treasury director-general Duncan Pieterse publicly launched the metro trading services reform package, saying it included legislative changes, stronger enforcement of funded budgets and financial recovery plans. They also include targeted investments in municipal infrastructure and smart metering and new approaches to ensure that public funds are matched to credible delivery.

Canvas not supported.

Is it working?

Early stages, too early to assess impact.

Actions

Operation Vulindlela reports that six metros have finalised and submitted performance improvement action plans to National Treasury as part of the trading services reform programme, targeting turnaround in their water and electricity operations. The first independent verification of metro performance is complete, and councils have adopted the eight minimum accountability commitments for all metros in the initial reform cohort (12 trading services across seven metros).

On 18 March, National Treasury director-general Duncan Pieterse publicly launched the metro trading services reform package.

Are there plans?

The plan is to implement this at targeted municipalities that need to submit performance improvement plans.

Is it on the agenda?

Falls under the Operation Vulindlela Phase 2 agenda.

Goals

A trading services reform programme for metropolitan municipalities aims to enhance the financial and operational efficiency of municipal trading services, particularly in the water and electricity sectors. An integral feature is to ringfence water revenue to be spent only on water projects, with the same for electricity. The programme also includes transferring unspent budgets to the DBSA and Municipal Infrastructure Support Agent to ensure spending occurs.

Documents

Departments / Govt Institutions

Department of Cooperative Governance and Traditional Affairs National Treasury

Summary

National Treasury anticipates that a performance-based incentive for metro trading services infrastructure investments will be developed by 2026. National Treasury (and likely Eskom and DWS) will be driving this initiative. In this model, trading services are managed and delivered by dedicated, professional utilities (or ring-fenced utilities), which can be structured as separate business units within municipalities or private companies operating under concessions. This separation is intended to create clear accountability and professional management of utilities.

The February 2026/27 Budget proposed that if municipal capacity to spend becomes a problem, the funds being lost would be transferred to entities such as the Development Bank of South Africa and the Municipal Infrastructure Support Agent.

On 18 March, National Treasury director-general Duncan Pieterse publicly launched the metro trading services reform package, saying it included legislative changes, stronger enforcement of funded budgets and financial recovery plans. They also include targeted investments in municipal infrastructure and smart metering and new approaches to ensure that public funds are matched to credible delivery.

Canvas not supported.

Is it working?

Early stages, too early to assess impact.

Actions

Operation Vulindlela reports that six metros have finalised and submitted performance improvement action plans to National Treasury as part of the trading services reform programme, targeting turnaround in their water and electricity operations. The first independent verification of metro performance is complete, and councils have adopted the eight minimum accountability commitments for all metros in the initial reform cohort (12 trading services across seven metros).

On 18 March, National Treasury director-general Duncan Pieterse publicly launched the metro trading services reform package.

Are there plans?

The plan is to implement this at targeted municipalities that need to submit performance improvement plans.

Is it on the agenda?

Falls under the Operation Vulindlela Phase 2 agenda.

Goals

A trading services reform programme for metropolitan municipalities aims to enhance the financial and operational efficiency of municipal trading services, particularly in the water and electricity sectors. An integral feature is to ringfence water revenue to be spent only on water projects, with the same for electricity. The programme also includes transferring unspent budgets to the DBSA and Municipal Infrastructure Support Agent to ensure spending occurs.

Documents

Departments / Govt Institutions

Department of Cooperative Governance and Traditional Affairs National Treasury

Analyst: Thabani Madlala
Status: in-progress
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    Separate the functions of authority and service provider for water and electricity services in municipalities.

    No data available for the deliverable: Separate the functions of authority and service provider for water and electricity services in municipalities.

    No data available for the deliverable: Separate the functions of authority and service provider for water and electricity services in municipalities.

    No data available for the deliverable: Separate the functions of authority and service provider for water and electricity services in municipalities.

    No data available for the deliverable: Separate the functions of authority and service provider for water and electricity services in municipalities.

    No data available for the deliverable: Separate the functions of authority and service provider for water and electricity services in municipalities.

    Summary

    The implementation phase involves the service authority and the service provider roles. A municipality acts as the service authority (regulator and planner) with the right to decide who will distribute electricity or water within its area. It may appoint a suitable service provider (entity delivering the service) through a service delivery agreement. A dedicated utility is expected to have single-point management accountability, professional and skilled staff and managerial autonomy to improve service delivery.

    Canvas not supported.

    Is it working?

    Government is yet to progress on this and it's too early for OV to have made progress yet. However, based on the National Treasury's Strategic Plan 2025-2030, the Trading Services programme is planned to be implemented by all eight metros by 2027/28.

    Actions

    Implementation phase is yet to take place. Measures will be put in place to ensure that municipal managers and CFOs meet the minimum standard for qualifications, experience and integrity

    Are there plans?

    Details of OV's role are still come. The Trading Services programme is planned to be implemented by all eight metros by 2027/28.

    Is it on the agenda?

    Falls under the Operation Vulindlela Phase 2 agenda.

    Goals

    Separate the functions of authority and service provider for water and electricity services in municipalities to imrpove services in each area across municipalities.

    Documents

    References

    Departments / Govt Institutions

    Department of Electricity and Energy Department of Public Works and Infrastructure Department of Water and Sanitation The Presidency

    Summary

    The implementation phase involves the roles of the service authority and the service provider. A municipality acts as the service authority (regulator and planner) with the right to decide who will distribute trading services, particularly electricity and water, within its area. It may appoint a suitable service provider (entity delivering the service) through a service delivery agreement. A dedicated utility is expected to have single-point management accountability, professional and skilled staff and managerial autonomy to improve service delivery. A newly tabled bill, the Water Services Amendment Bill, will also play a role in the licensing system for water service providers.

    Canvas not supported.

    Is it working?

    The process remains at an early stage, with key legislation and programmes still under development. That said, National Treasury's Strategic Plan 2025-2030 outlines that all eight metros will implement the overall trading services programme by 2027/28.

    Actions

    The implementation phase has yet to be fully completed. A part of this, the Minister of Water and Sanitation tabled the Water Services Amendment Bill in parliament in October 2025, with no advancement to committee deliberations yet. But it marks an initial but pivotal step in broader water reforms.

    Are there plans?

    The trading services programme is planned to be fully implemented by all eight metros by 2027/28.

    Is it on the agenda?

    Falls under the Operation Vulindlela Phase 2 agenda.

    Goals

    Separate the functions of authority and service provider for water and electricity services in municipalities to improve services in each area across municipalities.

    Documents

    References

    Departments / Govt Institutions

    Department of Electricity and Energy Department of Public Works and Infrastructure Department of Water and Sanitation The Presidency

    Summary

    The implementation phase involves the roles of the service authority and the service provider. A municipality acts as the service authority (regulator and planner) with the right to decide who will distribute trading services, particularly electricity and water, within its area. It may appoint a suitable service provider (entity delivering the service) through a service delivery agreement. A dedicated utility is expected to have single-point management accountability, professional and skilled staff and managerial autonomy to improve service delivery. A newly tabled bill, the Water Services Amendment Bill, will also play a role in the licensing system for water service providers.

    Canvas not supported.

    Is it working?

    The process remains at an early stage, with key legislation and programmes still under development. That said, National Treasury's Strategic Plan 2025-2030 outlines that all eight metros will implement the overall trading services programme by 2027/28.

    Actions

    The implementation phase has yet to be fully completed. A part of this, the Minister of Water and Sanitation tabled the Water Services Amendment Bill in parliament in October 2025, with no advancement to committee deliberations yet. But it marks an initial but pivotal step in broader water reforms.

    Are there plans?

    The trading services programme is planned to be fully implemented by all eight metros by 2027/28.

    Is it on the agenda?

    Falls under the Operation Vulindlela Phase 2 agenda.

    Goals

    Separate the functions of authority and service provider for water and electricity services in municipalities to improve services in each area across municipalities.

    Documents

    References

    Departments / Govt Institutions

    Department of Electricity and Energy Department of Public Works and Infrastructure Department of Water and Sanitation The Presidency

    Summary

    The implementation phase involves the roles of the service authority and the service provider. A municipality acts as the service authority (regulator and planner) with the right to decide who will distribute trading services, particularly electricity and water, within its area. It may appoint a suitable service provider (entity delivering the service) through a service delivery agreement. A dedicated utility is expected to have single-point management accountability, professional and skilled staff and managerial autonomy to improve service delivery. A newly tabled bill, the Water Services Amendment Bill, will also play a role in the licensing system for water service providers.

    Canvas not supported.

    Is it working?

    The process remains at an early stage, with key legislation and programmes still under development. That said, National Treasury's Strategic Plan 2025-2030 outlines that all eight metros will implement the overall trading services programme by 2027/28.

    Actions

    The implementation phase has yet to be fully completed. A part of this, the Minister of Water and Sanitation tabled the Water Services Amendment Bill in parliament in October 2025, with no advancement to committee deliberations yet. But it marks an initial but pivotal step in broader water reforms.

    Are there plans?

    The trading services programme is planned to be fully implemented by all eight metros by 2027/28.

    Is it on the agenda?

    Falls under the Operation Vulindlela Phase 2 agenda.

    Goals

    Separate the functions of authority and service provider for water and electricity services in municipalities to improve services in each area across municipalities.

    Documents

    References

    Departments / Govt Institutions

    Department of Electricity and Energy Department of Public Works and Infrastructure Department of Water and Sanitation The Presidency

    Analyst: Thabani Madlala
    Status: in-progress
    Last Updated:
    Next Update:
    Got an Update? Follow this reform
    Reform Area:
    Reform:

      If you would like to alert our analysts to an update you are aware of in this particular reform area, please complete the form below and submit it to us. Please ensure you include links to any press releases or other documents to confirm the reforms and provide detail to allow our analysts to assess the changes. Our team will review it.