The Municipal Forum at Enlit Africa 2026 explored how coordinated reforms can build financially sustainable, customer-focused electricity utilities.
South Africa’s electricity reforms have reached a critical new phase.
While significant progress has been made in stabilising generation and establishing the foundations for a competitive wholesale electricity market, attention is now shifting to perhaps the most complex part of the energy value chain: electricity distribution.
This was the focus of the Reform Action Plan session at the Municipal Forum during Enlit Africa 2026, where government leaders, municipal experts and international advisors explored how multiple reform programmes can be aligned to create a functional electricity market while strengthening municipal utilities.
Chaired by Dr Mpho Mahahle, Technical Advisor for EDI Reforms at the South African-German Energy Programme (SAGEN), the session brought together perspectives from Operation Vulindlela, the Presidency’s Just Energy Transition Project Management Unit (JET PMU), the Association of Municipal Electricity Utilities (AMEU) and international energy transition experts.
Rather than viewing reforms as separate initiatives, the discussion highlighted the need for municipalities to navigate an interconnected programme of structural, financial and governance reforms.
Rudi Dicks, Head of the Project Management Office in the Office of the President for Operation Vulindlela, described electricity distribution as the next frontier of South Africa’s energy reform programme.
After years of focusing on generation recovery and transmission restructuring, attention is turning towards the distribution sector, where financial instability, ageing infrastructure, a lack of capacity and governance challenges threaten the long-term sustainability of electricity services.
The scale of the challenge is considerable. Municipalities account for more than half of South Africa’s electricity distribution network, yet many face mounting debt, declining revenue collection, underinvestment in infrastructure and growing maintenance backlogs.
At the same time, changing customer behaviour, particularly the rapid adoption of rooftop solar and embedded generation, is fundamentally changing municipal electricity business models.
Dicks argued that reform must extend beyond fixing today’s operational problems. Instead, South Africa needs to build electricity distributors capable of operating in an increasingly decentralised, competitive and customer-driven market.
He emphasised that Operation Vulindlela’s proposals remain part of an ongoing engagement process rather than a final blueprint but outlined several immediate priorities.
Among these is the introduction of Distribution Agency Agreements (DAAs), approved by Cabinet as an interim intervention.
These agreements allow Eskom to temporarily perform certain distribution functions on behalf of municipalities experiencing severe operational or financial distress, while municipalities retain ownership of their distribution licences.
Dicks stressed that DAAs are not intended as a permanent solution but rather a stabilisation mechanism while longer-term institutional reforms are developed.
A recurring theme throughout the session was that electricity reform cannot be separated from wider municipal reform.
Municipal electricity businesses are increasingly being reshaped by National Treasury’s metro trading services reform programme, which promotes professionalised, ring-fenced municipal utilities with stronger governance and greater financial transparency.
According to Dicks, electricity differs from other municipal services because the market itself is changing rapidly.
Municipalities are no longer simply purchasing electricity from Eskom and selling it to customers. They are increasingly interacting with independent power producers, embedded generation, battery storage and customers who both consume and generate electricity.
These changes require municipalities to rethink how utilities are governed, financed and regulated.
Future reforms, he argued, should deliver cost-efficient operations, stronger revenue management, transparent electricity pricing, improved customer engagement, better regulatory compliance and investment in modern technologies such as smart meters and bi-directional energy systems.
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Khwezikazi Windvoel, Portfolio Lead for Municipalities at the Presidency’s Just Energy Transition Project Management Unit (JET PMU), reinforced the message that South Africa’s energy transition is fundamentally reshaping the role of municipalities.
As market reforms gather pace and new electricity trading arrangements emerge, municipalities are no longer simply infrastructure operators.
They are becoming central actors in enabling local energy markets, supporting investment and ensuring communities benefit from the transition to cleaner, more decentralised electricity systems.
Her contribution highlighted the growing alignment between electricity market reform and South Africa’s Just Energy Transition objectives, demonstrating that municipal reform is increasingly about building resilient local economies alongside modern electricity networks.
Providing an international perspective, Chris Ahlfeldt of Bluehorizon Energy examined how countries have separated electricity distribution infrastructure from retail trading functions to improve market efficiency and attract investment.
Drawing on international case studies, he explained that successful reforms typically distinguish between the “wires business” which is responsible for maintaining distribution infrastructure, and the retail function, which manages customer relationships and electricity trading.
This separation, often referred to as unbundling or disaggregation, improves transparency, allows regulators to monitor costs more effectively and creates opportunities for competition where appropriate.
However, Ahlfeldt cautioned against viewing unbundling as a simple organisational restructuring exercise.
International experience shows that successful reforms first require financially stable utilities, cost-reflective tariffs, capable regulators, transparent accounting and strong governance. Without these foundations, introducing competitive market structures can simply transfer existing weaknesses into a new institutional model.
He also emphasised that there is no universal solution.
Countries such as Brazil and the Philippines have adopted different approaches depending on the capacity and maturity of individual municipalities and utilities.
Larger, financially stronger utilities often move first, while smaller or rural utilities follow different reform pathways suited to their local circumstances.
For South Africa, this suggests reform should remain flexible rather than imposing a single model across all municipalities.
During the panel discussion, participants agreed that the success of electricity reform will depend less on any individual intervention than on the ability to align multiple reform programmes.
Operation Vulindlela, the Just Energy Transition, municipal governance reforms, National Treasury initiatives and electricity market restructuring all intersect within municipal distribution.
Rather than operating independently, these initiatives need to reinforce one another.
Panellists agreed that municipalities require greater regulatory certainty, improved financial sustainability and stronger institutional capacity before they can fully participate in a competitive electricity market.
Prof Vally Padayachee, Strategic Advisor at the AMEU, highlighted the importance of maintaining practical implementation alongside policy ambition, ensuring reforms strengthen municipal utilities rather than creating additional complexity.
The discussion also recognised that technology alone will not solve distribution challenges. Governance, revenue collection, asset management, professional leadership and regulatory compliance remain fundamental building blocks for successful reform.
The Reform Action Plan session concluded with a clear message: South Africa’s electricity reforms have entered a new chapter.
The focus is no longer solely on ending load shedding or introducing electricity trading. It is now about creating modern, financially sustainable municipal utilities capable of operating in a more competitive, decentralised and customer-focused electricity market.
Achieving this vision will require coordinated action across government, regulators, municipalities and industry.
The transition will not happen overnight, but the conversations at Enlit Africa 2026 demonstrated growing consensus that aligning reform agendas is essential to building an electricity distribution sector that is resilient, investable and ready for the future.
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