{"id":861538,"date":"2026-05-26T15:57:51","date_gmt":"2026-05-26T13:57:51","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=861538"},"modified":"2026-05-26T16:03:56","modified_gmt":"2026-05-26T14:03:56","slug":"treasury-terminating-debt-relief-for-failing-municipalities-in-south-africa","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/government\/861538\/treasury-terminating-debt-relief-for-failing-municipalities-in-south-africa\/","title":{"rendered":"Treasury terminating debt relief for failing municipalities in South Africa"},"content":{"rendered":"\n<p>The National Treasury says it is terminating the debt-relief programmes for municipalities that have consistently failed to meet their obligations\u2014and the next move is for them to deal with Eskom.<\/p>\n\n\n\n<p>This is according to Finance Minister Enoch Godongwana, who responded to a Parliamentary Q&amp;A on the failure of 61 municipalities in the country to clear their electricity debts.<\/p>\n\n\n\n<p>The debt relief programme ring-fenced historic electricity debt and suppressed related interest, creating space for municipalities to meet ongoing obligations.<\/p>\n\n\n\n<p>However, it is apparent that the programme failed.<\/p>\n\n\n\n<p>The minister noted that 61 municipalities\u2014the vast majority of the 71 that initially participated in the programme\u2014have consistently failed to meet several obligations.<\/p>\n\n\n\n<p>These failures include:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A failure in tariff management, specifically the inability to approve cost-reflective tariffs.&nbsp;<\/li>\n\n\n\n<li>An issue with revenue base accuracy; incomplete rate bases have not been fixed, resulting in a failure to bill all consumers for rates and services.&nbsp;<\/li>\n\n\n\n<li>Credit control and collection are lacking; credit controls have not been enforced, or outstanding revenue has not been collected, such as by failing to use electricity and water disconnections as effective collection tools.&nbsp;<\/li>\n\n\n\n<li>Resource losses also pose a significant challenge, with failures to address both technical and non-technical losses of water and electricity.&nbsp;<\/li>\n\n\n\n<li>Policy abuse due to the failure to enforce the national free basic services policy limits.<\/li>\n<\/ul>\n\n\n\n<p>\u201cThese failures are directly under the control and influence of the respective municipal councils,\u201d he said.<\/p>\n\n\n\n<p>The Treasury stated that increasing fiscal allocations to these municipalities is likely to weaken their political will to address these issues, ultimately harming future collection efforts.<\/p>\n\n\n\n<p>Given the Debt Relief Programme&#8217;s aim to achieve specific financial outcomes, the state is transitioning from a policy of conditional debt relief to a more structured, rigid intervention.<\/p>\n\n\n\n<p>As a result, the National Treasury is now terminating all persistent defaulters from the programme.\u00a0<\/p>\n\n\n\n<p>It added that the termination will allow the affected councils to proceed with a municipal relief debt write-off through a Distribution Agency Agreement (DAA) with Eskom.<\/p>\n\n\n\n<p>This agreement can only be completed by following the rules set out in the Municipal Systems Act and the Electricity Regulation Act. <\/p>\n\n\n\n<p>The DAA aims to reduce Eskom\u2019s risk of non-payment by municipalities while ensuring that basic services continue for communities.<\/p>\n\n\n\n<p>Under the DAA, municipalities would retain their electricity licenses, enabling them to restore stable service after five years. <\/p>\n\n\n\n<p>However, they will, in turn, give up some control over their services to Eskom, especially regarding billing and collection.<\/p>\n\n\n\n<p>Godongwana said that Eskom&#8217;s conditions will be tightened to ensure it collects payments from all municipalities as needed.<\/p>\n\n\n\n<p>According to Business Leadership South Africa (BLSA) CEO Busisiwe Mavuso, it is critical for South Africa that the municipal debt crisis is resolved.<\/p>\n\n\n\n<p>While Eskom and the country are celebrating a full year without load shedding, it is apparent that the new crisis for the power utility has shifted beyond scheduled outages.<\/p>\n\n\n\n<p>She stressed that municipal debt owed to Eskom is now exceeding R130 billion, with the City of Joburg&#8217;s R5.2 billion debt making headlines this past week, making matters worse.<\/p>\n\n\n\n<p>Eskom itself has flagged the debt as a massive issue, warning that it could reach R300 billion if left unchecked, unravelling the group&#8217;s turnaround.<\/p>\n\n\n\n<p>If the crisis is not resolved, the power utility could wind up back at National Treasury&#8217;s door, asking for a bailout\u2014footing taxpayers with the bill.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The National Treasury says it is terminating the debt-relief programmes for municipalities that have consistently failed to meet their obligations\u2014and the next move is for them to deal with Eskom.<\/p>\n","protected":false},"author":10,"featured_media":845584,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[15351,1164,3796],"class_list":["post-861538","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-government","tag-blsa","tag-eskom","tag-national-treasury"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/861538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=861538"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/861538\/revisions"}],"predecessor-version":[{"id":861597,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/861538\/revisions\/861597"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/845584"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=861538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=861538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=861538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}