Eskom Holdings SOC Ltd. will be allowed to take over the distribution of electricity in South African municipalities that collectively owed the state utility R85.2 billion at the end of last year.<\/p>\n\n\n\n
The government has offered support to local authorities that have fallen into arrears due to weak revenue generation, poor credit controls and other financial pressures. <\/p>\n\n\n\n
But only 15 of 71 councils that signed up for a turnaround program have consistently met the conditions to qualify for relief from the state, including demonstrating improved debt collection.<\/p>\n\n\n\n
\u201cTo protect the national grid and municipal validity, the government will introduce Distribution Agency Agreements, under which Eskom takes over’ power distribution from defaulting councils, the National Treasury said in the 2026 Budget Review, released in Cape Town on Wednesday.<\/p>\n\n\n\n
\u201cMunicipalities that refuse these conditions will be removed from the program and become liable for the entirety of their debts.\u201d<\/p>\n\n\n\n
To help ensure consumers pay for the electricity they use, the government is also backing a smart-meter program, with the budget allocating R2.5 billion over the next three fiscal years. <\/p>\n\n\n\n
More than 139,000 of the meters have already been installed in the debt-distressed municipalities, and there are plans to roll out another 96,400. \u00a0<\/p>\n\n\n\n
\u201cBeyond improving billing accuracy, these systems provide real-time data to identify leaks and illegal connections, directly addressing structural revenue losses,\u201d the Treasury said.<\/p>\n\n\n\n
Eskom, which generates the bulk of South Africa\u2019s electricity, recently stabilised the power system following years of outages that curbed economic growth.\u00a0<\/p>\n\n\n\n
The utility still faces challenges in unbundling the business, part of the liberalisation of the electricity sector that will include greater participation by power traders and private producers. <\/p>\n\n\n\n