- Nersa approves a 12 month electricity tariff reduction of 35 percent for two major ferrochrome smelters.
- Intervention aims to protect more than 20,000 jobs while preserving strategic industrial demand.
- Decision sparks debate over Eskom finances and long term industrial sustainability.
The Minister of Electricity and Energy, Dr Kgosientsho Ramokgopa, has welcomed the National Energy Regulator of South Africa approval of Eskom application to reduce electricity tariffs for two ferrochrome smelters operated by Samancor Chrome and the Glencore Merafe joint venture.
The approved intervention will lower tariffs by 35 percent for a period of 12 months and is intended to provide temporary financial relief to an industry facing intense global competition and operational closures. Government estimates the measure will help safeguard more than 20,000 jobs while preserving approximately 12 terawatt hours of strategic industrial electricity demand.
According to the Department of Electricity and Energy, the structured pricing intervention represents an initial step toward a broader industrial support framework. The time bound relief is designed to give Eskom, government and industry stakeholders space to co-develop a sustainable medium to long term solution for energy intensive sectors.
The approved interim tariff of 87.74 cents per kilowatt hour is structured to allow Eskom to recover its variable costs while limiting the impact on other electricity customers. The Ministry said the approach balances economic protection with system stability.
The Minister noted that government continues to work closely with Eskom, industry and public finance institutions to deliver both short term relief and longer term reforms without creating unintended pricing pressures across the electricity system. He also acknowledged Eskom operational improvements that have enabled such targeted economic interventions.
The Eskom smelter tariff task team will continue engagements with the Department of Electricity and Energy, the Department of Trade Industry and Competition, National Treasury, the Industrial Development Corporation and affected industry stakeholders. These discussions will focus on aligning the short term relief with government budget frameworks and broader industrial support mechanisms.
Eskom said the intervention aligns with its corporate strategy and supports revenue stability, financial sustainability and long term system optimisation. The Minister also recognised the extensive work undertaken by all parties to conclude the agreement during the December holiday period.
Preserving jobs through sustained electricity losses criticised
However, the decision has drawn criticism from analysts and commentators who argue that the regulator has prioritised political considerations over long term economic sustainability. Critics point to Eskom ongoing financial challenges, including significant public bailouts since 2011, high debt levels, growing municipal arrears and continued reliance on fiscal support.
Concerns have also been raised that selling electricity below cost deepens Eskom debt burden and increases future taxpayer exposure. Some stakeholders argue that transferring operational losses from private companies onto the public balance sheet undermines sound industrial policy.
The debate has intensified around whether preserving jobs through sustained electricity losses represents strategic economic intervention or places an unsustainable burden on South African consumers and public finances.
Author: Bryan Groenendaal
