POWERING UP: Eskom’s three tenors sing a song of reindustrialisation under new pricing model

Eskom, South Africa's state-owned power utility, unveiled a new pricing model aimed at reindustrialization, shifting the burden of supporting heavy industry away from the general public. The minister of electricity and energy, Kgosientsho Ramokgopa, introduced this model alongside Eskom executives Mteto Nyati and Dan Marokane, promising a rise in operational smelters from 11 to 49 by the end of 2027, resulting in a 74% utilization rate. This would create and preserve 11,448 direct and 121,392 indirect jobs in the process.

The new pricing model leverages the fiscal framework negotiated with the National Treasury, utilizing the R10-billion from the last debt relief tranche. Eskom CEO Dan Marokane emphasized that the initiative will not require additional government funding, projecting that the preservation of tax-paying industries will benefit the fiscus by approximately R5.5-billion through increased tax revenue.

Eskom's transition from a constraint to a catalyst in the South African economy is central to this strategy. By providing affordable electricity to smelters, the government anticipates an influx of R20-billion in raw mineral expenditure and R76-billion in export earnings. The pricing reform aims to make these industries more competitive against global counterparts, such as China.

However, Transalloys, the sole remaining manganese smelter in South Africa, expressed concerns about the practical timeline for implementation. The company had to halt production on July 1, 2026, putting 600 jobs and a multibillion-rand investment at risk due to exclusion from discussions regarding the bailout. Transalloys CEO Konstantin Sadovnik welcomed the policy focus on curbing electricity costs but urged caution regarding the pace of change, emphasizing the urgency of providing a sustainable tariff.