Eskom Takes Bigger Role in Four Municipalities’ Electricity Supply

Four South African municipalities have handed Eskom a bigger role in managing their electricity businesses as financial and operational problems continue to put pressure on municipal power networks.

Ditsobotla, Emfuleni, Maluti-A-Phofung and Merafong have signed Distribution Agency Agreements (DAAs) with Eskom, allowing the state-owned utility to manage their ring-fenced electricity operations.

The arrangements do not amount to a full transfer of electricity services to Eskom. The municipalities retain their electricity distribution licences, while Eskom acts as their agent.

Under the agreements, Eskom collects electricity revenue, supports employee training, conducts cost-of-service studies and helps manage and strengthen the distribution networks.

Eskom said the agreements are temporary measures intended to help municipalities restore the sustainability of their electricity businesses.

“There are currently four signed DAAs with Maluti-A-Phofung, Emfuleni, Ditsobotla, and Merafong,” the utility said.

Eskom has also established a dedicated project management office to coordinate the agreements with the participating municipalities and other stakeholders.

Municipal debt drives deeper Eskom involvement

The move comes against a backdrop of growing financial pressure on South Africa’s municipalities, many of which struggle to collect electricity payments, maintain infrastructure and settle their debts to Eskom.

In November 2025, Eskom said 47 municipalities participating in its municipal debt relief programme were still in default. The utility blamed weak revenue collection, high electricity and water losses, inadequate maintenance and poor credit controls.

Eskom said municipalities that continued to default could eventually move to DAAs as an interim measure.

The agreements represent more than a change in who manages electricity operations. They are part of a broader attempt to prevent failing municipal electricity businesses from worsening supply problems and accumulating more debt.

The approach, however, has also raised concerns over municipal accountability and compliance with the law.

Civil rights organisation AfriForum is challenging Merafong’s agreement with Eskom in court. The organisation argues that the municipality may not have followed all the required procedures before entering into the arrangement.

AfriForum revealed that it had sought evidence that statutory requirements, including public notices, feasibility studies, council resolutions and the necessary regulatory approvals, had been met.

It has asked the court to declare the Merafong DAA unlawful and set it aside, while also challenging the role of the National Energy Regulator of South Africa (NERSA) in the process.

The dispute demonstrates the wider tension surrounding DAAs: municipalities need help to stabilise struggling electricity businesses, but transferring operational responsibility to Eskom still has to comply with South Africa’s regulatory and local-government framework.

The agreements give Eskom a way to help stabilise struggling municipal electricity businesses without taking over their distribution licences. They also give the municipalities access to Eskom’s technical and operational expertise as they contend with weak finances, ageing infrastructure and growing pressure to maintain reliable electricity services.