SALGA raises concern over Eskom’s distribution agreement for indebted municipalities

 The South African Local Government Association (SALGA) has raised concern about Eskom’s proposed Distribution Agency Agreement (DAA), warning that it risks being perceived as a backdoor takeover of municipal electricity distribution functions.

According to a statement from Eskom earlier this year, the DAA is a long-term contract that municipalities can enter into with Eskom.

­“Through the DAA, Eskom provides various services to strengthen the technical and financial capacity of municipalities, ensuring the sustainability of electricity provision. These services include skills development and training, meter installation or replacement, and revenue collection on behalf of municipalities.”

SALGA said while it acknowledged the urgency of ensuring reliable power supply and alleviating the financial strain faced by municipalities, the DAA in its current form threatens to undermine the constitutional mandate of local government.

SALGA admitted that the challenges of municipal debt are undeniable. However it said electricity reticulation is explicitly assigned to municipalities in Schedules 4B and 5B of the Constitution of the Republic of South Africa and any deviation from this responsibility must comply with the Municipal Systems Act.

The organisation said bypassing these processes would erode municipal autonomy and compromise democratic accountability. The implications of the proposed agreement extend far beyond governance structures:

• Communities risk losing their right to hold elected municipal leaders accountable for electricity delivery.
• Municipalities risk being stripped of their core developmental function, weakening financial sustainability.
• Local economies risk instability if municipalities cannot plan and leverage electricity distribution as part of integrated development.

SALGA president, Bheke Stofile, cautioned: “The R416 billion owed to municipalities by households, businesses, state-owned enterprises, and government departments (National Treasury, March 2025) is often overlooked, while the R210 billion owed by municipalities to Eskom and water boards is amplified at every turn. This imbalance distorts public perception and undermines trust. Both sides of the ledger matter.”

He added: “If municipalities are to deliver services sustainably, every sector must honour its obligations. Empowerment, not takeover, is the only viable path to restoring financial stability and protecting the dignity of our communities. Rescue tools must not become backdoor takeovers. Strengthening municipalities is the only path to reliable electricity and restored public trust.”

THE MERCURY