The Problem
Critical financial and operational challenges
40.4 percentage points below target
R33.6M
Monthly shortfall across inter-service dependencies
The municipality faces outstanding debt to Eskom and has been offered participation in the National Treasury Municipal Debt Relief program.
Why Section 78?
Strategic opportunity, not just compliance
Section 78 is NOT:
- ✕A licence revocation mechanism
- ✕Automatic transfer of electricity service
- ✕Surrender of municipal constitutional duties
Section 78 IS:
- A strategic tool to define service outcomes
- Framework to set non-negotiable DAA requirements
- Legal mechanism to protect SSEG & affordability programs
- Opportunity to embed governance structures
Strategic Advantage: By completing Section 78 before finalizing the DAA, the municipality can embed SSEG continuity, virtual wheeling enablement, and evening-peak DSM into the governance structure—ensuring affordability interventions and debt relief compliance work in concert.
Four Strategic Imperatives
Interconnected objectives for success
Debt Settlement & Financial Sustainability
Settle all current Eskom debt through Municipal Debt Relief program with strict 30-day payment discipline
Service Delivery Continuity
Maintain uninterrupted electricity service while enhancing quality and affordability
SSEG Program Protection
Protect existing SSEG program from disruption under any external service delivery arrangement
Alternative Revenue Generation
Establish new revenue streams through virtual wheeling and evening-peak DSM programs
Proposed Process Timeline
22-week implementation roadmap
Emergency Council Resolution
Council resolution accepting DAA alternative and committing to Section 78 process
Section 78 Preparation
Establish project team, conduct internal assessment, define service requirements
Stakeholder Notification
Publish public notice, notify organised labour, announce consultation schedule
External Options Assessment
Assess DAA option costs, benefits, capacity and community impacts
Community & Labour Consultation
Conduct public meetings, receive submissions, compile consultation report
Council Decision
Finalize Section 78 report, obtain council resolution on DAA
DAA Negotiation
Negotiate with Eskom embedding all service requirements into agreement
Final Approval & Execution
Council approval, DAA execution, submission to National Treasury by 1 Sept 2026
A structured DAA that maintains municipal licence-holder status, preserves SSEG program operations, enables virtual wheeling revenue opportunities, implements evening-peak DSM for cost reduction, and satisfies National Treasury debt relief conditions—creating a sustainable path forward that protects municipal interests while meeting all stakeholder requirements.