Government

One of South Africa’s worst municipalities that leaves 94% of its electricity bills unpaid

Staff Writer

 ·24 Nov 2025

Power utility Eskom recently named and shamed the worst municipalities in South Africa that owe it the most debt, flagging one in particular where payment rates are as low as 6%.

This low-paying municipality is the Ngwathe Local Municipality in the Free State, which covers several small towns in a 7,000 square kilometre area, with a population of approximately 135,000 people.

The municipality forms part of the Fezile Dabi District Municipality and is home to towns such as Parys, Tumahole, Heilbron, Koppies, and Vredefort, and has been dysfunctional for years.

According to Eskom’s data, Ngwathe has consistently been one of the lowest-paying municipalities in the country, with payment rates ranging between 7% and 29% over the past three years.

At September 2025, the municipality owed the utility over R2.7 billion in debt, with the payment rate at 6%.

The non-payment of the Eskom debt has been laid at the feet of the municipality, with lobby groups like AfriForum taking on the municipal leadership over the matter.

Notably, many residents do pay their electricity and service bills to the municipality through prepaid and monthly bills, but the municipality itself fails to remit this to creditors like Eskom.

However, the municipality’s revenue collection rates are also lower than normal, as some residents withhold payment amid a wider service delivery collapse.

The region is also notorious for illegal connections—something that has been repeatedly flagged by the municipality in its engagements with Eskom over the debt.

Eskom, in the past, tried to deal with the non-payment of debt in the region by cutting power supply to the towns, but this was nixed by the courts.

This specific issue came to the fore in 2022, where the Constitutional Court criticised Eskom for reducing or cutting power supply to Ngwathe because of its non-payment.

While the municipality is clearly dysfunctional, residents and businesses who pay their bills and fork out for services would be unfairly penalised by the action.

Despite the ruling, the municipality’s dysfunction has led to further legal challenges, where AfriForum sought urgent intervention in the municipality, even seeking to have the municipal council dissolved.

In June 2025, the Free State High Court ruled on such a case, compelling the provincial government to intervene at the municipality.

Dysfunctional and failing residents

Residents of the towns in the region have faced collapsing infrastructure, disrupted water and power supply and failing service delivery for years.

In its ruling, the court noted that, by the municipality’s own admission, it is in a financial crisis and unable to fulfil its service delivery mandate, with the Eskom debt being just one standout issue.

Responding to the case, the municipal manager confirmed that these issues would not be “remedied over a short period of time”, adding to the case of crisis in the area.

At the time (June 2025), the municipality owed Eskom in excess of R2 billion, with only around R69 million in respect of interest being written off through Eskom’s debt relief measures.

This proved ineffective, as by September 2025, the debt increased to R2.7 billion. Furthermore, the municipality owed millions of rands to other service providers.

The court noted that the municipality had been paying service providers late, and, as a result, millions of rands in fruitless and wasteful expenditure relating to interest charges had been incurred.

AfriForum said it had for years been trying to get the municipality to acknowledge the crisis and allow it and the community to help with a recovery plan, but this was ignored or rejected.

In the meantime, the group used its own resources to assist the communities in sourcing water and other services.

The court acknowledged these efforts, adding that Auditor General reports made it clear that Ngwathe is not in a position to fulfil its constitutional obligations.

As a result of its severe service delivery failure, collection rates in the municipality were also collapsing.

“The fact of the matter is that the debt collection rate decreased over the years,” the court said.

“The annual average collection percentage is far below the norm. The lack of service delivery contributes towards the revenue decline.”

As a result, it was conceded that Ngwathe is unable to pay suppliers and run its daily operations as expected. “This is a concession that mandatory intervention is required,” the court said.

Ultimately, the court found that Ngwathe Local Municipality is in breach of its constitutional, legislative and regulatory obligations towards its residents.

It ordered that the province intervene with a recovery plan, dissolve the municipal council, and adopt a new budget.

The order was appealed, but the the Supreme Court of Appeal dismissed the bid in October 2025. The municipality has indicated that it will now approach the Constitutional Court.

Worst of the worst

According to Eskom, Ngwathe is one of the 14 municipalities where it will be focusing its debt recovery efforts, with a plan endorsed by the National Treasury.

While it does not owe the highest amount, Ngwathe by far has the lowest payment rate.

This plan is to move defaulting municipalities onto Eskom’s Distribution Agency Agreements (DAAs).

Through the DAAs, Eskom will take over municipal electricity services for a defined period, and assist in raising revenue and with bill collections.

If the municipalities can stick to the terms and conditions of the plan, they will, in turn, get some of the debt written off, in line with the group’s Debt Relief Programme.

Eskom wants to make DAAs mandatory for all defaulting municipalities, and has urged National Treasury to endorse this through a circular.