New municipal councils inherit a R122.5 billion Eskom bill

New municipal councils across South Africa have barely been elected and they already face a deadline.

National Treasury’s compliance roadmap, which requires municipalities to meet debt repayment and reform measures, has deadlines running until 30 November.

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That is just days after councils must hold their first meetings, which are due by about 22 November.

The timing matters for residents.

Councils will take over at a moment when water outages, power cuts and potholes are tied directly to unpaid bills, and when government has made clear that paying for basic services must come first.

What new municipal councils are being told to do first

The Department of Cooperative Governance, National Treasury and the South African Local Government Association (SALGA) have issued guidelines for the transition to the new councils.

A key step is an administrative handover report.

The municipal manager, chief financial officer and senior managers must set out:

• the municipality’s financial position
• its service delivery programmes
• the infrastructure projects under way.

The guidelines are clear that councils must “prioritise the payment of creditors, including Eskom and Water Boards, to avoid service disruptions and financial instability”.

Councils must also ensure their budgets are funded, meaning they are based on money the municipality can realistically collect.

The numbers behind the municipal infrastructure backlog

The scale of what councils inherit is stark:

• R122.5 billion is owed to Eskom by municipalities, according to the utility, as of August 2026
• 110 municipalities each owe Eskom more than R1 million in overdue debt
• R484.5 billion is owed to municipalities by households and businesses, but only 63.9% is collected, according to National Treasury budget data
• Only 39 of 257 municipalities received clean audits in 2024/25, down from 41 the year before

Eskom has warned that municipal debt could reach R358 billion by 2031 without decisive action.

What the Auditor-General found on infrastructure

The Auditor-General’s latest local government audit shows why so many projects fail to deliver.

Of the infrastructure projects it reviewed, 86% had findings.

Problems included contractors being paid without delivering work, poor-quality work and assets that were never used.

The audit found delays of 25 months in 72 projects, and cost overruns in 70.

A common pattern was municipalities firing contractors after paying them large sums, then hiring new ones who started from scratch.

Maintenance is also being neglected. Municipalities are failing to set aside the recommended 8% of their budgets for maintenance, which leads to deteriorating infrastructure and service interruptions.

None of the eight metros achieved a clean audit.

In total, 116 municipalities had unfunded budgets, worth R288.17 billion, according to the Auditor-General’s briefing to Parliament in October.

Why unpaid bills mean dry taps and dark streets

When municipalities fail to pay Eskom and water boards, services suffer, even for residents who pay their own accounts on time.

Matjhabeng in the Free State, which includes Welkom, shows how bad it can get. In early November, residents there had gone more than 20 days without water.

The municipality owes its water board R9.5 billion.

In July, Finance Minister Enoch Godongwana withheld the July equitable share, the money national government sends municipalities, from 69 municipalities.

The reasons included unpaid debts to Eskom and water boards, unfunded budgets and wasteful spending.

The remaining R7.1 billion was released later that month.

By the end of July, 38 of the 69 had agreed repayment plans, and R4.2 billion had been paid towards creditor debt.

Can new municipal councils keep up?

The track record so far is mixed.

Of the 71 municipalities approved for government’s municipal debt relief programme, Eskom says only eight are keeping up with their current accounts.

Eskom has warned that municipalities’ obligations do not change when new leaders take office, though it admits leadership changes bring uncertainty.

With many councils hung after the election, coalition talks could slow down the decisions needed on budgets and repayments.

What residents should watch out for

Over the next few weeks, residents can judge their new council by whether it:

• adopts a funded budget, not one built on unrealistic collection targets
• keeps up with Eskom and water board payments
• publishes its handover report, and explains which infrastructure projects are continuing
• sets aside money for maintenance, such as fixing leaking pipes, ageing substations and potholes
• acts on the Auditor-General’s findings. Across local government, only about 30% of the Auditor-General’s recommendations from the previous audit period were implemented.

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