The South African Local Government Association (SALGA) has warned that Eskom’s proposed distribution agency agreement (DAA) could undermine municipalities’ constitutional mandate over electricity distribution.
The DAA is a framework under which Eskom takes over operational responsibilities such as billing, revenue collection and network maintenance on behalf of municipalities while ownership of the infrastructure remains with local government. Eskom argues the model improves revenue recovery and service reliability in financially distressed municipalities that struggle to manage distribution networks.
The approach has already been tested. In March, the National Energy Regulator of South Africa approved a licence amendment allowing Eskom to operate distribution services in the Warden and Ezenzeleni areas under the Phumelela Local Municipality in the Free State. The decision followed a municipal resolution to transfer electricity services after several years under an “active partnering” arrangement.
SALGA, however, cautions that expanding this model without following the correct legal procedures risks eroding municipal authority. Electricity reticulation is assigned to municipalities under Schedules 4B and 5B of the Constitution. Any change must comply with the Municipal Systems Act including council resolutions, public consultation and alignment with integrated development plans, according to SALGA.
“Bypassing these processes would weaken local accountability, undermine financial sustainability and limit communities’ ability to hold elected leaders responsible for electricity delivery,” said SALGA President Bheke Stofile.
