National Treasury has confirmed that it has assessed Emfuleni Local Municipality’s compliance over the second debt relief cycle from June 2024 to May 2025. The municipality is assessed based on having to meet 57% of the conditions of its debt relief approval during the second cycle of its participation.
Ogalaletseng Gaarekwe, deputy director-general of intergovernmental relations at National Treasury, wrote a letter to Emfuleni’s municipal manager, April Ntuli, and Eskom CEO Dan Marokane on June 25, instructing the power utility to write off the second one-third of the municipal debt of Emfuleni to the value of R1 971 119 395.89.
“The debt write-off is to be effected in Eskom’s financial system, and Eskom is to align its accounting records and the municipality’s Eskom statement(s) and invoice(s) to reflect the debt write-off within two calendar months from the date of this letter.
Extraordinary support
Municipal debt relief is an extraordinary support, and in this context the municipality is advised to maintain and improve its adherence to the conditions of its approval over the remaining year of the debt relief programme. The following shortcomings require strong leadership intervention and persistent oversight.
“It is noted that the municipality owes Eskom R3.8-billion in excess of 10 months as at 18 May 2026 in relation to cycle 3 and owes DWS [Department of Water and Sanitation] and Rand Water R1.9-billion as of 31 March 2026,” the letter read.
“The municipality, as part of achieving a funded budget (condition 6.4) is required to strongly reduce expenditure to align with its realistic anticipated revenue envelope during the upcoming 2026/27 Medium-Term Revenue and Expenditure Framework (MTREF) process and properly budget for all bulk supplier commitments, including any seasonal fluctuations in consumer consumption.
Gaarekwe said it was noted that Emfuleni has completed tariff tool submitted with the 2025/26 tabled MTREF, which indicated that the electricity and water tariffs are not cost reflective.
“The 2025/2026 tabled and adopted MTREF narratives also did not include any strategy to phase in cost-reflective tariffs as required per the municipal debt relief condition. The 2026/2027 MTREF narratives need to be strengthened to clearly set out the municipality’s phasing-in strategy to achieve cost-reflective electricity tariffs aligning to any cost of supply (CoS) study submission to NERSA and the related NERSA tariff approval as part of the upcoming 2026/27 budget consultation processes with the community.
“This process further addresses the separate identification and recording of irrecoverable debt per service and the allocation of local government equitable share funding per service in accordance with the Division of Revenue Act (DoRA).
Emfuleni urged to strengthen policies
Gaarekwe also said that Emfuleni needs to strengthen its policies to facilitate blocking and or applying any purchases of pre-paid electricity to rates, water, wastewater and refuse when these are in arrears as well as to facilitate that the municipality achieve the quarterly collection rate targets as per the requirements of condition.
“Any such blocking of or applying revenue from pre-paid purchases should be preceded by providing proper notification to pre-paid consumers that credit control will be enforced in this manner when the account falls into arrears. This coupled with the proper allocation of consumer payments (also from pre-paid purchases) within the municipal financial system aligning to condition is crucial for financial sustainability to maintain account payments as per condition and achieve the quarterly collection rate targets per the requirements of condition.
“The municipality in its June 2025 indigent reporting indicated that it is unable to restrict the water supply to 6 551 indigent households with conventional water meters and that 54 185 indigent households are receiving water but have no water meters – these 60 736 indigent households therefore receive an unlimited supply of free water. The municipality also reported that it is not restricting 516 indigent households with conventional electricity meters and that 11 281 indigent households are receiving electricity but have no electricity meters, these
11 797 indigent households therefore receive an unlimited supply of free electricity,” she said.
She pointed out that it was concerning considering the municipality is in arrears to both Eskom and Rand Water and cannot afford to provide an unlimited supply of free water to the 60 736 and free electricity to 11 797 indigent households.
“This must be addressed as a priority [and] the municipality must address this going forward. The municipality, as it progressively replaces the old electricity and water meters with meters that have the technical ability to restrict water, the action reports should also be submitted. It is important to physically restrict electricity (and water in Eskom supply areas) as part of the credit control efforts and these measures in combination with the other conditions are essential for controlling costs, ensuring that limited resources are allocated efficiently and that revenue is optimised; etc. The municipality to strengthen its overall debt relief reporting, including the upload of the monthly financial recovery plan (FRP) progress reports to the GoMuni portal, the monthly Municipal Finance Management Act (MFMA) S71 statement narratives to fully align with the National Treasury debt relief reporting guidance, the monthly upload of MFMA Circular No.130, consolidated proof of payments to bulk suppliers and the other required revenue related reporting components to the GoMuni portal; etc.,” said Gaarekwe.
She also said that Emfuleni should fully adhere to the accounting and Municipal Standard Chart of Accounts (mSCOA) requirements set out in the MFMA Circular No. 124, supplementary guide when accounting for the debt write-off and or any other benefit(s) of debt relief monthly and in the annual financial statements.
New mayor fixing non-compliance
Gaarekwe also said that the National Treasury was also congratulating the municipality, which is now led by the new mayor, Hassan Mako, elected late last month, for showing resilience in correcting the non compliance with few conditions and the positive behavioural change culminating in the second one-third debt relief benefit materialising.
“It is critical to pro-actively partner with the Gauteng Provincial Treasury and Provincial Department of Cooperative Governance and Traditional Affairs to ensure the municipality successfully maintains the conditions for the remainder year of its debt relief participation and beyond,” she said.
Mako said that Emfuleni commended the National Treasury’s decision to approve the second tranche of the Eskom Municipal Debt Relief Programme.
“This approval will lead to the write-off of approximately R1.97 billion of the municipality’s historical Eskom debt. This achievement underscores the municipality’s advancements in fulfilling the conditions of the debt relief program and highlights its dedication to re-establishing financial stability and enhancing its fiscal well-being. The debt write-off represents a substantial contribution to the municipality’s financial recovery efforts. This measure will enhance Emfuleni’s financial standing by alleviating the burden of legacy debt, fortifying its balance sheet, and generating increased fiscal capacity to allocate resources towards improving service delivery, maintaining essential infrastructure, and ensuring the long-term viability of municipal finances,” said Mako.
He said that the accomplishment is positive, Emfuleni recognises clear obligations, and ongoing adherence to the terms of the debt relief program which is crucial for eligibility for the final installment of debt relief.
“The municipality extends its sincere gratitude to the National Treasury, the Gauteng Provincial Treasury, the Department of Cooperative Governance, Eskom, and all stakeholders for their continued support of its financial recovery initiatives. Their invaluable guidance and oversight have been pivotal in enabling Emfuleni to achieve significant advancements in establishing robust financial governance and enhancing accountability. The municipality acknowledges the National Treasury’s identification of areas necessitating further enhancement, specifically in strengthening revenue collection, bolstering credit control measures, improving reporting compliance, and ensuring that electricity and water tariffs progressively reflect their true costs. We have already initiated interventions to address these concerns and are steadfast in our commitment to achieving full compliance with all outstanding conditions,’ said Mako.
Emfuleni’s road to financial recovery
He emphasised that the Emfuleni’s financial recovery is contingent upon both governmental support and the active engagement of residents, businesses, and all consumers of municipal services.
“Consequently, we implore all customers to consistently and promptly remit payments for municipal services. Each payment received empowers the municipality to compensate bulk service providers, uphold infrastructure, enhance service delivery, and foster a financially sustainable municipality that effectively serves its constituents. The municipality remains dedicated to sound financial management, transparency, accountability, and responsible governance throughout its ongoing recovery. By collaborating with communities, the municipality anticipates strengthening its financial standing to enhance service delivery and foster an environment conducive to economic growth, investment, and an improved quality of life for all residents,” said Mako.
- National Treasury has confirmed that it has assessed Emfuleni Local Municipality’s compliance over the second debt relief cycle from June 2024 to May 2025.
- The municipality is assessed based on having to meet 57% of the conditions of its debt relief approval during the second cycle of its participation.
- Ogalaletseng Gaarekwe, deputy director-general of intergovernmental relations at National Treasury, wrote a letter to Emfuleni’s municipal manager, April Ntuli, and Eskom CEO Dan Marokane on June 25, instructing the power utility to write off the second one-third of the municipal debt of Emfuleni to the value of R1 971 119 395.89.
- “The debt write-off is to be effected in Eskom’s financial system, and Eskom is to align its accounting records and the municipality’s Eskom statement(s) and invoice(s) to reflect the debt write-off within two calendar months from the date of this letter.
- Extraordinary support Municipal debt relief is an extraordinary support, and in this context the municipality is advised to maintain and improve its adherence to the conditions of its approval over the remaining year of the debt relief programme.
