Eskom might face an uphill battle if industrial heavyweights start closing their doors, energy expert Tshepo Kgadima told Business Day.
Kgadima referred to ArcelorMittal SA (Amsa), SA’s largest steel manufacturer, which is considering closing its two major long-steel plants in Newcastle and Vereeniging.
Amsa announced the plan last month, a move that could put 3,500 jobs on the line and endanger a further 25,000 positions in the steel value chain.
The company has since delayed the shutdown by a month for further negotiations with the government, which is exploring options to keep the business afloat.
While Eskom insists Amsa’s potential exit will not affect the country’s electricity supply, Kgadima warns that losing large industrial clients poses a significant risk to the power utility’s financial stability.
Eskom is already grappling with a shrinking customer base due to soaring tariffs and the increasing affordability of renewable energy alternatives.
“ArcelorMittal runs on about 300MW,” said Kgadima, highlighting the scale of the potential loss.
While Eskom declined to confirm these figures, citing the Protection of Personal Information (Popi) Act, Kgadima called this chunk “huge”.
“The whole country of Botswana runs on under 500MW,” he added.
More needs to be done by Eskom’s board and management. My fear is that they are not doing enough.
— Tshepo Kgadima, energy expert
Eskom has long relied on large industrial users to offset declining revenue from residential and small commercial customers.
The power utility’s current dispatchable generation capacity is just under 30,000MW, yet self-generation — especially through rooftop solar — has surged to nearly 11,000MW in the past eight years, Kgadima noted.
“Green energy, such as solar panels, has also become more affordable. This means that it costs more now to buy electricity from Eskom than it does to self-generate,” he said.
The situation was worsened by a previously unreliable power supply and high tariffs that have pushed businesses and households towards self-generation.
This shift, combined with the departure of major industrial customers, represents a “great danger for Eskom in terms of its sustainability,” Kgadima warned.
“The customers are on a migration, and the migration is driven by exorbitant tariffs. So, the more you increase tariffs, the more customers will migrate.”
The fallout from Eskom’s declining customer base extends beyond the utility itself, threatening broader economic stability.
As Eskom’s financial troubles deepen, Kgadima noted the government has been forced to intervene with repeated bailouts, diverting funds from essential services such as education, healthcare and policing.
“In order for Eskom to continue supplying power to a limited customer base, National Treasury will continue with cash bailouts,” Kgadima warned.
The government has committed to providing Eskom with debt relief of more than R250-billion over a three-year period, placing immense strain on the national budget.
Moreover, Eskom’s crisis is adding to SA’s unemployment challenges.
The whole country of Botswana runs on under 500 megawatts
— Tshepo Kgadima, energy expert
“The government has even floated the idea of retrenching 250,000 civil servants to cut costs,” Kgadima said, linking these potential job losses directly to the fiscal pressures created by Eskom’s financial woes.
Eskom, however, does not appear worried about the impact of Amsa’s possible exit. “The (potential) loss (of Amsa) does not affect Eskom’s ability to supply electricity to the nation,” the utility said in response to Business Day’s enquiry.
The power provider boasted that it had supplied electricity for 311 consecutive days without load-shedding, apart from a temporary 37-hour setback on March 26.
Eskom also pointed to its generation operational recovery plan, which includes adding new capacity from Kusile unit 6 and returning Medupi power station’s unit 4 to service.
“Eskom will continue implementing the generation operational recovery, strengthening its governance, tackling crime and corruption and future-proofing the organisation to enable energy security, growth and long-term sustainability to the benefit of South Africans and Sub-Saharan Africa,” the utility said.
In its latest interim financial results for the first half of the 2025 financial year (April 1 to September 30 2024), Eskom reported a 16% revenue increase to R183.7bn, up from R158.6bn in the same period the previous year. This was primarily driven by a 12.74% regulatory tariff increase coupled with a 4% rise in sales volumes and the absence of load-shedding.
The utility says it is now banking on pricing incentives, cross-border sales growth, and new energy sector opportunities to drive short-term expansion.
Additionally, Eskom is pursuing asset disposals and consistently processing applications for new electricity connections, “maintaining a strong pipeline of potential customers”.
But Kgadima remains unconvinced. “More needs to be done by Eskom’s board and management. My fear is that they are not doing enough,” he cautions.
Amsa declined to comment on the matter, citing the sensitivity of its long-steel business wind-down process and its current “closed period” under JSE regulations.
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