Struggling municipalities begging for debt relief

While the debt write-offs have given struggling municipalities some breathing space, many still face challenges with compliance.

By early 2025, Eskom and Treasury figures showed that municipal debt had climbed to about R90 billion, with 71 municipalities taking part in the debt relief programme.

However, a large number of municipalities are at risk of being removed from the programme for failing to meet repayment and revenue collection requirements.

The embattled Emfuleni Local Municipality (ELM) is the latest to ask for a bail-out. The municipality, which owed Eskom R8 billion in unpaid electricity bills before the National Treasury scrapped a portion of the debt, is once again pleading for another bailout.

In May 2024, the National Treasury instructed Eskom to write off more than R1.9 billion of Emfuleni’s debt after the municipality met most of the debt relief programme’s conditions. At the time, Treasury cautioned Emfuleni to adhere to strict conditions or risk termination from the debt relief programme. The municipality admitted there was still work to be done to fully meet Treasury’s requirements and settle the outstanding two-thirds of its Eskom debt, which amounts to more than R3 billion.

In light of this development, ActionSA slammed Emfuleni’s latest plea, describing it as yet another sign of fiscal irresponsibility. The party noted that this appeal comes just months after the close-out of a six-year Section 139(1)(b) intervention by the Gauteng Provincial Government, a process that consumed vast public resources but produced little evidence of a sustainable turnaround.

"It is disheartening that despite receiving repeated technical and financial support, including from provincial departments, Emfuleni continues to exhibit fiscal irresponsibility and governance failures," said Funzi Ngobeni, ActionSA Gauteng Provincial Chairperson.

Ngobeni further pointed out that Gauteng MEC for Cooperative Governance confirmed Emfuleni had adopted an unfunded budget for the 2025/26 financial year, placing it in direct violation of the eligibility criteria for Eskom Debt Relief outlined by the National Treasury.

He stressed that one of the key conditions of the programme is the adoption of a funded budget and compliance with financial recovery plans, requirements that Emfuleni has demonstrably failed to meet.

ActionSA has rejected Emfuleni’s latest bailout plea, accusing the Provincial Government of ignoring persistent failures. The municipality still owes Eskom over R5.3 billion, despite Treasury conditionally writing off nearly R1 billion in 2023 to support financial reforms. According to the party, the MEC’s report shows that CoGTA has yet to enforce accountability or issue formal directives.

The party has called for urgent interventions, including halting further Eskom debt write-offs for Emfuleni until it complies with the Debt Relief Framework, enforcing compliance through legislative directives, releasing the updated Financial Recovery Plan, disclosing Debt Management Committee records, and exploring alternative governance mechanisms such as renewed provincial intervention.

The Freedom Front Plus (FF Plus) has also criticised Emfuleni’s request for additional Eskom debt relief, calling it political theatrics ahead of the 2026 local government elections. 

Responding to the criticism, Emfuleni MMC for Finance and Revenue, Hassan Mako, said the municipality’s compliance currently stands at 76%.

He noted that Eskom has not yet processed the first write-off of R8,844,260, adding that the National Treasury is already engaging with Eskom on the matter. Mako further explained that Emfuleni has a distribution agency agreement with Eskom, which allows Eskom to operate the municipality’s electricity department on its behalf.

Emfuleni Municipality Communications Manager Makhosonke Sangweni said that the National Treasury programme sets requirements for municipalities to qualify for debt write-offs, strengthening their financial capacity to deliver services. "Emfuleni previously received approval and is now applying for a second phase to reduce its debt."

DA MPL Kingsol Chabalala said while debt relief from the National Treasury is a step in the right direction to safeguard residents’ access to basic services, it is long overdue for Emfuleni to review its operations and strengthen its planning and financial management.

"Residents pay for services, but the money is not used accordingly; as a result, Emfuleni is not paying money to creditors like Eskom and Rand Water. These creditors end up attaching the bank account of the municipality," Chabalala said.

As previously reported by IOL, since the inception of the Eskom Debt Relief Programme, the National Treasury has approved applications from more than 50 municipalities, granting debt relief amounting to billions of rands. Among the notable beneficiaries is Lekwa Local Municipality in Mpumalanga, which had its R1.8 billion Eskom debt conditionally written off, provided it implements strict fiscal reforms and improves its revenue collection systems.

In other regions, Western Cape municipalities such as Matzikama, Beaufort West, Kannaland, and Cederberg were conditionally approved for Eskom debt relief, demonstrating the programme’s reach across multiple provinces. Additionally, over 60 municipalities nationwide submitted applications, with 28 approved for partial debt relief, covering nearly R56.8 billion.

The Star

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