Civil rights organisation AfriForum has raised serious concerns about the legality of an agreement struck between the Merafong municipality and Eskom late last year. Under the deal, residents of the Carletonville-based Gauteng municipality would pay Eskom directly for electricity rather than channelling payments through the local authority. The arrangement, known as a Distribution Agency Agreement (DAA), is Eskom's mechanism for tackling massive municipal debt, which stood at more than R105 billion when the deal was announced. Merafong alone owed Eskom R1.6 billion in arrears by the close of last year, making it the third municipality to sign such an agreement.
AfriForum contends that the deal was concluded without adequate transparency and may have bypassed key legal requirements. In a recent reminder letter addressed to the municipality, the organisation has demanded clarity on the procedures followed before the agreement was finalised in December 2025. The organisation cautions that the process may contravene provisions of the Municipal Systems Act, which requires a comprehensive process before an external service provider can be appointed — including public participation, a feasibility study, and approvals from both the National Treasury and the National Energy Regulator of South Africa (Nersa).
"It is of crucial importance that these agreements comply with the necessary legislation," said Deidre Steffens, adviser for local government affairs at AfriForum. She stressed that while municipal debt remains a critical challenge, remedies must not undermine legality and transparency. "Alternative solutions must be found and an agency agreement for power distribution is one of the solutions. The finance minister even recently encouraged municipalities to enter into similar agreements with Eskom."
Steffens noted that the situation is further complicated by Nersa's apparent failure to confirm whether Merafong has applied to voluntarily surrender its electricity distribution licence. Under the Electricity Regulation Act, a licence holder cannot simply hand over its powers without such revocation or written authorisation from Nersa, she explained.
AfriForum has now given the municipality a deadline to furnish proof that all statutory requirements were satisfied. Should the municipality fail to do so, Steffens warned that the agreement could potentially be set aside by a court on the grounds of procedural irregularities.
