South Africa’s main mining industry body, Minerals Council South Africa, has called on Eskom to urgently speed up the liberalisation of the nation’s electricity market, highlighting growing concern about the crippling cost of power.
The state-owned utility’s monopoly and unsustainable pricing methodologies are fuelling an affordability crisis for local households and businesses, it said, threatening to deter investment and slow output.
“The trajectory of electricity tariffs poses the next serious threat to competitiveness and economic growth in South Africa,” said Minerals Council economist André Lourens in the council’s latest report on Eskom’s energy availability.
“Current trends indicate that the country is producing less electricity at increasingly higher prices — a combination that suppresses demand and, in turn, constrains economic growth."
Eskom is being unbundled into three distinct entities responsible for generation, transmission and distribution in a huge overhaul aimed at boosting efficiency and investment in the nation’s electricity sector.
Its unbundling, announced by the electricity minister in 2019, has since achieved functional separation and the establishment of the National Transmission Company South Africa (NTCSA), Eskom’s transmission unit, as a subsidiary, but full legal and operational independence for all three entities is still in progress.
Lourens told Business Day that the sluggish progress means Eskom’s tariff trajectory remains a serious concern for local industry.
Read: The enemy within: Eskom fleeced of R20bn in three years
The council’s report showed that electricity tariff increases have consistently exceeded the Reserve Bank’s inflation target for more than two decades.
This substantial burden on the cost bases of energy-intensive mining and manufacturing industries is expected to ramp up in the near term.
Energy regulator Nersa has approved electricity tariff hikes that imply a cumulative increase of about 25% over the next three financial years. Companies and households, unable to afford the rising cost of power, have already begun to cut back on consumption.
As a result, Eskom reported that it now has more than 9,000MW, enough to power about 5-million homes, in excess generation, which has become too expensive for many households and businesses and is therefore not being consumed.
To make matters worse, a pending investigation into errors in Nersa’s tariff determinations in 2025 has added uncertainty to the outlook for consumers of Eskom power.
Late in 2025 Nersa launched a market inquiry due to concern that the regulator’s actual tariff increases exceeded its approved 12.74% increase for financial year 2026.
“Ongoing uncertainty around Nersa’s tariff decisions and the broader tariff trajectory is a growing concern, particularly for energy-intensive sectors such as smelting, which face the real risk of closure without relief on electricity pricing,” said Lourens.
Business Day reported that South Africa’s embattled ferrochrome industry endured one of its most challenging years in recent memory in 2025, with worldwide exports of the steelmaking ingredient plunging 70% in the year to end-September.
The NTCSA indicated in 2025 that it would launch the South African Wholesale Electricity Market (Sawem) in a phased approach, starting on April 1.
The new system aims to reshape South Africa’s electricity markets so that consumers can buy power in an open market and escape the Eskom monopoly. The hope is that, in time, competition will drive down wholesale energy costs as more efficient private producers enter the market.
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