Eskom municipal takeover may expand to 30 municipalities

Salga says Eskom should be able to ‘throw its hat in the ring’ while competing on an even footing with other bidders. Picture: Gallo Images/Charles Gallo If National Treasury gets its way, Eskom will be appointed as an agent to run the electricity function of at least 30 municipalities in terms of an amended Distribution Agency Agreement (DAA). This is according to presentations to a joint sitting of the parliamentary portfolio committees for Electricity and Energy along with Cooperative Governance and Traditional Affairs (Cogta).

It is not clear whether Eskom has the required capacity or how such a huge increase in its distribution activities will be funded – but municipal arrear debt to Eskom now amounts to R114 billion, which poses an existential threat to the utility. The joint sitting followed a request by DA parliamentary spokesperson on electricity and energy Kevin Mileham for more information about the DAAs that have so far been implemented in three municipalities. The committee received presentations from Eskom, the departments of Electricity and Energy and Cogta, National Treasury and the South African Local Government Association (Salga).

Treasury indicated that of the 13 municipalities it wrote to earlier, warning they would be kicked out of the National Treasury debt relief programme unless they enter a DAA, 10 have adopted a council resolution to pave the way in that direction, two are still considering the matter and one has declared a dispute. The latter presumably refers to the Dr Beyers Naudè Local Municipality based in Graaff-Reinet, which has launched a court challenge in this regard. These municipalities have consistently failed to adhere to the conditions of the debt relief programme, which could have seen Eskom write off their arrear debt over a period of three years.

[paywall]

The conditions include paying their current account on time and in full. They have been given until 1 September to submit a signed DAA or face expulsion from the programme. If they don’t, National Treasury says the following may happen: If they ultimately all enter into a DAA, and together with the current three DAAs, this will bring the total number of municipalities where Eskom takes over to 16.

[/paywall]