Treasury names SA municipalities that are getting Eskom debt relief (and those that failed test)

Key topics:

• Only 24 of 71 municipalities qualified for Eskom debt relief.

• Western Cape excelled; Free State and Mpumalanga mostly failed.

• Some historic defaulters like Emfuleni surprisingly met conditions.

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By BizNews Reporter

In a stark revelation of the administrative capabilities—or lack thereof—within South Africa’s local government, the National Treasury has released the specific outcomes of its municipal debt relief programme. 

The data paints a concerning picture: of the 71 municipalities currently enrolled in the programme to clear their astronomical debts to Eskom, only 24 met the strict compliance conditions required to receive the first tranche of debt write-offs.

This represents a success rate of just 33%, signalling that two-thirds of the country’s most indebted councils are still unable to adhere to basic financial hygiene, even when billions of Rands in debt forgiveness are dangled as the carrot.

The "carrot and stick" approach

The debt relief package, unveiled by Finance Minister Enoch Godongwana, was designed as a lifeline for Eskom’s balance sheet and a reset button for municipalities paralysed by historic debt. 

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The deal was strict but straightforward: if municipalities paid their current Eskom accounts in full for 12 consecutive months and met other technical conditions (such as restricting borrowing and implementing smart metering), the Treasury would assume their historic debt in three annual tranches.

However, information released to BizNews by DG Duncan Pieterse’s team at the National Treasury following a recent lockup presser confirms that for the majority of applicants, the discipline required to maintain these conditions has proven elusive.

The Western Cape clean sweep

The data reveal distinct differences in governance quality across provinces. The Western Cape achieved a 100% success rate for its applicants.

Four Western Cape municipalities applied for the programme: Matzikama, Cederberg, Kannaland, and Beaufort West. All four appear on the list of 24 towns approved for the one-third write-off. 

While these are smaller municipalities, their ability to meet Treasury’s conditions contrasts sharply with that of their peers in other provinces.

The Free State and Mpumalanga collapse

The most alarming data comes from the Free State and Mpumalanga, arguably the epicentres of the municipal collapse.

In the Free State, excluding the Metro, the failure rate was absolute. Ten municipalities applied, including major defaulters such as Matjhabeng (Welkom) and Maluti-a-Phofung (Harrismith).

According to the Treasury lists, none of these local councils qualified for the write-off. The only success story in the province was the Mangaung Metro.

The situation is equally dire in Mpumalanga, the home of South Africa’s coal belt and energy generation. Ten municipalities entered the programme, including Emalahleni (Witbank), Lekwa, and Govan Mbeki. Of these ten, only one—the City of Mbombela—succeeded in qualifying for the write-off.

This failure is significant. Municipalities like Emalahleni and Matjhabeng are among Eskom’s largest debtors. Their inability to meet the conditions suggests that despite the offer of a clean slate, the structural financial issues in these councils—ranging from illegal connections to non-payment by residents—remain unresolved.

The surprise successes: Emfuleni and Msunduzi

However, the list of 24 "winners" contains some surprises that offer a glimmer of hope.

Emfuleni Local Municipality in Gauteng, historically infamous for having the highest irregular expenditure and largest debt book in the country, managed to qualify for the write-off. 

For a municipality that has faced the seizure of its vehicles and bank accounts by Eskom in the past, meeting these conditions represents a massive, if unexpected, turnaround in financial discipline.

Similarly, Msunduzi (Pietermaritzburg) in KwaZulu-Natal, which has been under administration multiple times, made the cut. Other notable successes include Sol Plaatje (Kimberley) and the City of Matlosana (Klerksdorp).

The Metro Picture

During the press briefing, reference was made to the performance of the Metros. While the full details of the Metro-specific breakdown remain under discussion, the inclusion of Mangaung (Bloemfontein) on the successful write-off list is a critical victory for the metro, which has spent years lurching from one crisis to another.

Conversely, the absence of other troubled large councils from the success list raises questions about the sustainability of service delivery in high-density areas outside the major economic hubs of Johannesburg, Cape Town, and Durban (most of which did not need or apply for this specific relief mechanism).

The Consequence of Failure

For the 47 municipalities that applied but failed to qualify for the first tranche, the clock is ticking. The debt relief programme is not an open-ended offer. Failure to comply with the conditions doesn't just mean missing out on a write-off; it means the interest on that historic debt continues to compound, and their current accounts with Eskom may again fall into arrears.

If these municipalities breach the conditions entirely, they face expulsion from the programme, returning them to square one: facing massive debt judgments, potential asset seizures, and the inability to maintain grid stability for their ratepayers.

Conclusion

The Treasury’s list is more than just a spreadsheet of debt; it is a diagnostic tool for the state of local government.

It highlights a "two-speed" municipal landscape. On one side, 24 councils—led by a perfect score in the Western Cape and some miraculous turnarounds in Gauteng and KZN—are clawing their way back to solvency. 

On the other hand, 47 councils, dominated by the Free State and Mpumalanga, remain trapped in a cycle of non-compliance and debt.

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For investors and residents in those 47 areas, the message from Treasury is clear: the bailout was offered, but your local government fumbled the ball.

Winners and losers

The 24 Municipalities granted the 1/3rd Write-Off:

 * Eastern Cape: Makana, Amahlathi, Raymond Mhlaba.

 * Gauteng: Emfuleni, Mogale City, Rand West City.

 * KZN: Msunduzi, Endumeni, Ulundi.

 * Limpopo: Bela Bela.

 * Free State: Mangaung (Metro).

 * Mpumalanga: City of Mbombela.

 * Northern Cape: Nama Khoi, Ubuntu, Umsobomvu, Siyancuma, Dawid Kruiper, Sol Plaatje.

 * North West: Ramotshere Moiloa, City of Matlosana.

 * Western Cape: Matzikama, Cederberg, Kannaland, Beaufort West.

Notable Failures (Applied but received no write-off):

 * Free State: Matjhabeng, Maluti-a-Phofung, Moqhaka, Ngwathe.

 * Gauteng: Merafong City, Lesedi.

 * Mpumalanga: Emalahleni, Govan Mbeki, Lekwa, Thaba Chweu.

 * North West: Madibeng, Ditsobotla, Mamusa.

 * Eastern Cape: Enoch Mgijima, Walter Sisulu, Dr Beyers Naude.