Final decision on Free State municipalities’ potential disconnection on hold while talks toward Distribution Agency Agreements continue
Thursday, 20 March 2025: Eskom is actively working with defaulting Free State municipalities to resolve outstanding debt following an intervention by the Minister of Electricity and Energy (MoEE), Dr Kgosientsho Ramokgopa, on 17 February 2025. The initiative seeks to develop sustainable solutions for municipalities facing electricity-related financial difficulties.
During a meeting in Bloemfontein, Minister Ramokgopa urged financially distressed municipalities to engage with Eskom in negotiations and consider signing Active Partnering Agreements that can lead to Distribution Agency Agreement (DAA’s). This initiative is designed to help municipalities enhance service delivery by leveraging Eskom’s expertise in engineering, revenue collection, and financial management. Eskom has seen recent DAA’s signed help to curb electricity losses, reduce a municipality’s debt growth rate, and improve both service quality and payment levels.
The DAA is a long-term contract that municipalities can enter into with Eskom. Through the DAA, Eskom provides various services to strengthen the technical and financial capacity of municipalities, ensuring the sustainability of electricity provision. These services include skills development and training, meter installation or replacement, and revenue collection on behalf of municipalities.
To further encourage negotiations, Eskom has formally invited 11 municipalities in the province to participate in discussions. Additionally, on 10 March 2025, Free State Cooperative Governance and Traditional Affairs (COGTA) Head of Department, Mr. Tshepiso Ramakarane, met with Eskom and the six municipalities to reiterate the importance of finding mutually beneficial solutions.
Earlier this year, Eskom issued notices regarding the potential disconnection of bulk electricity supply to several municipalities. On 29 January 2025, a notice was published for Mantsopa Local Municipality in accordance with the Promotion of Administrative Justice Act (PAJA). Similar notices followed on 12 February 2025 for the Masilonyana, Moqhaka, Nala, Ngwathe, and Nketoana Local Municipalities.
As discussions continue, the planned disconnection of bulk electricity supply remains on hold. Eskom remains committed to working with municipalities to explore all viable solutions before considering disconnections, which will only be implemented as a last resort.
Municipal debt remains one of Eskom’s biggest challenges. Collecting municipal debt is a key focus for Eskom. The company will employ various strategies to recover owed funds, enabling investment in maintaining and strengthening electricity supply, fostering socio-economic growth, and reducing the need for interventions like loadshedding.
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