The Merafong City local municipality, in Gauteng, has become the third municipality in South Africa to sign a distribution agency agreement (DAA) with State-owned utility Eskom, marking a major structural intervention aimed at stabilising electricity distribution and improving revenue collection in the area.

The agreement was formally concluded on December 8, during a signing ceremony at the Merafong Council Chambers attended by municipal manager Dumisani Mabuza, senior executives of Merafong City and senior Eskom leadership led by Gauteng Cluster Organisation GM Bandile Jack.

The DAA forms part of Merafong City’s broader turnaround strategy, which aims to stabilise electricity infrastructure, strengthen financial management, rebuild public trust and support local economic development.

According to the municipality, the agreement represents a strategic and transitional measure to address operational inefficiencies, improve governance and enhance the consistency and reliability of power supply for residents and businesses.

Merafong City is the third municipality to enter into such an arrangement after Maluti-a-Phofung, in the Free State, and Emfuleni, in Gauteng.

The agreement also takes place against the backdrop of rising municipal financial distress, including the national municipal debt owed to Eskom, which Eskom said exceeded R105-billion as of September.

Eskom said the DAA formed part of its broader proactive effort to support municipalities experiencing operational challenges, weakened revenue collection and strained financial sustainability linked to electricity delivery.

Under the terms of the agreement, electricity distribution and certain retail functions will be jointly managed through a structured framework. Billing and revenue collection will be ring-fenced and administered through Eskom systems, while Merafong City will remain the electricity licence holder.

Eskom will provide technical expertise, operational support and skills transfer. Free basic electricity will be disbursed directly by Eskom to qualifying indigent households.

The municipality said long-term structural reforms would continue through the National Treasury to support municipal fiscal sustainability.

“Today represents more than the signing of a document. It represents a shared commitment to strengthening our electricity network, enhancing technical support and ensuring that our residents receive the stable and reliable services they deserve. This agreement reinforces our vision of building a sustainable, responsive city centred on accountability and progress,” Mabuza said.

According to the municipality, the DAA is expected to strengthen operational coordination between Eskom and Merafong City, improve maintenance processes and fault response times and enhance planning for infrastructure investment.

The municipality said the agreement also introduced clearer responsibilities, reporting lines and accountability mechanisms, supported greater reliability and predictability of electricity supply, protected existing jobs and established structured training, capacity building and skills transfer for municipal employees.

“The signing of this DAA with Merafong is a critical step towards it stabilising electricity distribution and improving revenue collection to enable the municipality to provide electricity for its citizens.

“This partnership demonstrates Eskom’s commitment to work collaboratively and proactively with municipalities to restore operational efficiency and ensure sustainable service delivery for communities with the focus on capacitation and skills transfer,” Eskom acting group executive for distribution Agnes Mlambo said.

Eskom and Merafong City both promised transparent communication, operational cooperation and improved service delivery. They also committed to working together to implement the DAA and to support visible improvements in electricity distribution.