The South African Local Government Association (Salga) has warned that Eskom’s proposal to implement distribution agency agreements (DAAs) to curb growing municipal debt to the utility could be perceived as a backdoor takeover of municipal electricity distribution functions.

Eskom outgoing CFO Calib Cassiem on September 30 proposed the use of DAAs and prepaid supply models as possible solutions to the growing municipal debt problem.

He pointed out during a presentation of Eskom’s results for the financial year ended March 31, that debt owed to the utility by municipalities was above R103-billion and was likely to increase to above R300-billion by 2030 if action was not taken soon.

Salga states in an October 9 media release that it acknowledges the urgency of ensuring reliable power supply and alleviating the financial strain faced by municipalities; however, it believes the proposed DAAs, in their current form, threaten to undermine the constitutional mandate of local government.

It points out that electricity reticulation is explicitly assigned to municipalities in Schedules 4B and 5B of the Constitution and that any deviation from this responsibility must comply with the Municipal Systems Act, including community consultation, council resolutions, feasibility assessments and alignment with integrated development plans.

Bypassing these processes, it states, would erode municipal autonomy and compromise democratic accountability.

It adds that the implications of the proposed agreement extend far beyond governance structures, with communities at risk of losing their right to hold elected municipal leaders accountable for electricity delivery; municipalities at risk of being stripped of their core developmental function, weakening financial sustainability; and local economies at risk of instability if municipalities cannot plan and leverage electricity distribution as part of integrated development.

Salga reiterates that support to municipalities must not come through unilateral impositions, adding that Eskom and national departments must engage transparently with municipalities, Salga and communities; align with constitutional and legislative frameworks; avoid actions that erode the role of local government; and prioritise capacity building, financial restructuring and sustainable debt management.

“The R416-billion owed to municipalities by households, businesses, State-owned enterprises and government departments 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,” says Salga president Bheke Stofile.

He stresses that, 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,” he states.