Friday, 12 June 2026: The South African Communist Party (SACP) calls for democratic consensus-seeking consultation to get to the root of the crisis of Eskom and municipal debt and its solution on a sustainable basis, as opposed to actions that may undermine the constitutional functions of the local government sphere in the interest of privatisation in electricity and elsewhere. The debt crisis is indicative of a broader economic crisis that impacts millions of our population, the majority being workers and poor, with high levels of unemployment and poverty.

Any intervention that has the potential to undermine or usurp any constitutional function of the local government sphere – threatening affected municipalities with load reduction and devoid of measures to roll back neo-liberal policies and their long-term economic failure – must be rejected.

The SACP has taken this stance, having noted the recent parliamentary sessions that have an approach by the national energy provider, Eskom, the Department of Electricity and Energy, and the National Treasury, in the main, regarding their plans for “agreements” with different municipalities that owe Eskom. This pertains to the provision and administration of electricity in those municipalities. The “agreements” are called “Distribution Agency Agreements” (DAA). This sounds like the DA(A).

The action to impose the DAAs on municipalities takes place within the context of the government’s unbundling of Eskom towards three unbundled entities in electricity generation, transmission and distribution, respectively. This agenda is mainly underpinned by the private wealth accumulation interests that stand to benefit through the capture of electricity generation and marketisation of transmission and distribution. It is also pushed and thus supported by the Washington-based imperialist-controlled institutions such as the International Monetary Fund and the World Bank Group, as well as by the Western credit rating agencies and the Paris-based Organisation for Economic Co-operation and Development. The influence of these forces and private wealth accumulation interests, including, but not limited to, those seeking the capture of electricity generation has become more dominant in our policy space than participatory democracy to give effect to the Freedom Charter’s goal that “The people shall govern”.

The unbundling of Eskom goes hand in hand with liberalisation insinuating private power producers, called “independent power producers”, in electricity generation and, likewise, insinuating other private wealth accumulation interests in transmission and distribution. In distribution, Eskom is already hollowed out through the outsourcing of electricity connections, thus distribution network expansion, and fixing of breakdowns or other faults to a multiplicity of private contractors. While in the past privatisation involved the sale of state assets, in part or in whole, it has now expanded to involve the conversion of functions that were played by the state through public utilities, state-owned enterprises or other public entities into a field of private wealth accumulation. This is what outsourcing, the unbundling of Eskom and liberalisation in the targeted network infrastructure areas are designed to facilitate. The same is therefore to be found in ports, water, rail networks and operations, and thus in the unbundling of Transnet.

The wider developments unfolding in electricity as a sector, broadly understood, are clearly aimed at altering the power supply value chain from generation and after for the benefit of private interests in terms of new capacity expansion, ownership and wealth accumulation, as opposed to consolidating and strengthening democratic public control in line with the Freedom Charter’s clause on ownership and control of monopoly industries by the people as a whole. The neo-liberal reforms undermine the developmental role of a producer state by replacing this function in the long run with that of a procurer state.

The DAA approach has the potential effect of usurping the affected municipal functions or undermining municipalities. The SACP agrees with the South African Local Government Association on its stance that the functions of the local government sphere of the government as provided for in the constitution through the relevant schedule must be respected rather than violated or marginalised through intrusive or other means. If not upheld within a framework of democratic legislation, the impact on the affected municipal functions will undermine the role of municipalities, which must, in contradiction, be supported adequately, including through fiscal and broader economic policies.

The generation, provision and administration of electricity are too important a national developmental need to hand over to or leave to the impulses of market forces. Rather than private wealth accumulation interests, an uninterrupted electricity supply anchored in the public pathway involving at its centre public utilities and municipalities whose orientation supports national economic development is crucial. This must be combined with the in-sourcing of the many unnecessarily outsourced public functions and a decisive programme to clamp down on and thus decisively deal a blow to corruption in municipalities, government generally, Eskom, and the broader economy by private-sector forces.

Instead of a developmental state approach, the proponents of the DAA in its current form clearly appear to be using the indebtedness of municipalities to Eskom as justification for a policy framework of neo-liberalism. For them, this is a technical balancing exercise related only to questions of “cost recovery” and “user pay” collection systems of the municipalities. This is, however, a narrow perspective when considering the broader long-term neo-liberal economic policy failure characterised by the crises of high unemployment and poverty in the context of another serious problem, high inequality.

The overall debt of municipalities to Eskom is estimated at R110 billion, indeed indicating a concerning picture. However, on the other hand, at an estimated R416 billion, money owed to municipalities by residents, private sector companies and even government departments and public entities is more than four times the amount that municipalities owe Eskom. To narrow this to mere debt management between two or more entities is to misunderstand the broader picture. As opposed to government and public entities, which, by the way, find themselves under the yoke of the neo-liberal policy of austerity budgeting, and unlike the private sector firms that make profits, many residents do not owe municipalities deliberately. Why is this the case?

There are at least 13 million active and discouraged unemployed work seekers combined in South Africa. About 61.6 per cent of our national population suffer from compounded deprivations, evaluated using international thresholds that track poor health, lack of education and low living standards, alongside low income. There are an estimated 30 million people in South Africa, about 55.5 per cent of our population, who live below the upper-bound poverty threshold of roughly between R1,634 and R2,635 per month. A significant proportion of families in metropolitan areas are paying for electricity amounts within these values per month. There are about 23 million people, roughly 37.9 per cent of our population, who live under the lower-bound poverty rate, while 13.8 million, roughly 25.2 per cent of the population, live under the extreme food poverty rate.

There can be no doubt that the inability of the affected poor families to meet their municipal payment obligations is rooted in neo-liberal policy failure to create employment and eradicate poverty. Any intervention, such as the DAA in its current form, which ignores the broader realities is bound to fail, as is already indicated by at least one municipality that defaulted even after it was forced to enter into it. Such approaches must be reviewed. Beyond this, a real intervention that goes to the root of the matter will roll back the failed neo-liberal policy framework at all levels of the government, including municipalities, and replace it with a transformative policy trajectory that will rebuild the economy for all the people, especially by industrialising and creating employment at a scale that will bring down unemployment based on decent work and by eradicating poverty.

The DAA, as it stands and imposed by the National Treasury in collaboration with Eskom, by threatening the affected municipalities with load reduction, is counter-productive and backward to say the least. This will further impact the economy negatively, and it is an inappropriate response to a deep-rooted crisis of long-term neo-liberal policy and capitalist system failure. The SACP rejects the approach and calls for consultation to get to the root of the problem and solve it sustainably.