SA's electricity system: 300 000 jobs; a flawed system; zero accountability

Key topics:Electricity tariffs crushing South African businessesNERSA accused of protecting failed energy structures300,000 industrial jobs lost amid rising power costs. By Tommy Diedericks*.Picture this. You're a small business owner renting space in a shopping centre in Pretoria or Johannesburg. You work twelve-hour days. You carry staff. You pay rent, salaries, UIF, PAYE — every obligation without complaint. And then your electricity bill arrives. R11 per kilowatt-hour. Sometimes more.You call the landlord. You ask the question every reasonable person would ask: why am I paying R11 a unit when I can see the solar panels on the roof? Why am I paying the municipal rate for electricity that your system is generating at under R1 a unit — and in some cases under 50 cents? The answer, when it comes, is some variation of: that's the rate. That's the resell law, and you get forwarded a law from 1985 and a tariff sheet you can not begin to understand.Two kilometres away, your direct competitor owns their building. They have a direct Eskom line. They installed solar. They have access to wheeling agreements. Their effective electricity cost is R1.20 a unit. They sell the same product you sell. They have a 60% structural cost advantage over you on energy alone. Not because they're smarter. Not because they work harder. Simply because of where they plug in.This is not a hypothetical. This is the daily reality for tens of thousands of South African businesses in 2025. And today — at a NERSA public hearing on a negotiated electricity price agreement for two ferrochrome companies — I sat in a room where none of that was being discussed. Not formally. Not systematically. Not as a national emergency that it undeniably is..A REGULATOR THAT FORGOT WHAT REGULATION MEANS.The National Energy Regulator of South Africa was established to protect consumers and ensure a fair, functioning electricity market. Over the past two decades, it has instead become the country's most expensive rubber stamp. Since 2007, NERSA has approved tariff increases that total 1,172%. In the same period, consumer price inflation was 174%. Electricity costs in South Africa did not increase six times faster than inflation by accident. They did so with official approval, one application at a time, in small hearing rooms that most South Africans have never heard of.I want to be precise about what those approvals produced. We lost partly or completely Bridgestone, Goodyear, Continental and Dunlop. Four tyre manufacturers laregly gone. Between them, seven million tyres a year that South Africa used to make locally, and somewhere between 5,000 and 50,000 jobs across the direct and downstream supply chain, depending on how you want to count. It is now, as one industry body put it plainly, cheaper to import tyres from Asia than to manufacture them here.We lost ArcelorMittal's long steel division. Newcastle. Vereeniging. Thousands of years of accumulated industrial skill, permanently dissolved. SEIFSA estimates that up to 293,754 direct and indirect jobs in the steel and engineering sector are now at risk on a five-year horizon. We have already lost between 300,000 and 400,000 jobs across the broader smelting and ferroalloy value chain since Eskom's tariffs began their sustained above-inflation climb post-2007. That figure comes from Professor Sampson Mamphweli, the head of South Africa's own National Energy Development Institute — not from a lobby group, not from me. From the man whose job it is to know.."We've lost between 300,000 and 400,000 jobs." — Prof. Sampson Mamphweli, SANEDI, December 2025.Of 48 ferrochrome smelters that once operated in South Africa, four remain. Four. This is a country that holds 72 to 80% of the world's chrome ore. We are sitting on the world's largest mineral endowment for this industry and we have managed to lose it anyway — not to superior competitors, not to better technology, but to the simple arithmetic of an electricity bill that nobody with the power to fix it has ever truly been forced to confront..THE R11 SCANDAL NOBODY TALKS ABOUT.Let me come back to that shopping centre tenant. Because this is where the story gets personal, and where I think ordinary South Africans need to understand what is actually happening to them.South Africa currently has over 1,000 different electricity tariff structures. Every municipality charges differently. Every landlord reselling electricity gets to set their prices in the sea of these tariffs. Eskom has its Megaflex. Municipalities have their commercial and industrial variants. Landlords — who are supposed to be prohibited by law from profiting on electricity resale — routinely charge tenants at full municipal rates while their rooftop solar systems generate electricity at under R1 a kilowatt-hour. The spread between what it costs them to generate and what they charge is pure margin. It is legal in practice because enforcement is almost nonexistent. And NERSA, which has the authority to fix this, has not fixed it.I work with real businesses. I have sat across from a business owner in Ekurhuleni paying over R11 per KWH in winter peak a unit from the municipality, watching his competitor across town on an Eskom direct feed pay a fraction. I have shown a Midrand office building how they went from paying nearly R70,000 a month for electricity to under R2,000 after installing solar. The system is not chaotic by accident. It is tilted. The businesses that can afford to escape it do. The ones that cannot are being slowly bankrupted by it. And NERSA decides, in separate hearings on separate days, which of these realities it will look at..ESKOM CANNOT HAVE IT BOTH WAYS.Today's public hearing is specifically about Eskom's application to amend negotiated pricing agreements with Samancor Chrome and the Glencore-Merafe Chrome Venture — two ferrochrome producers on the brink of permanent closure. Eskom has offered them electricity at 62 cents per kilowatt-hour. NERSA needs to approve it. I support this approval. These companies must survive, because when a smelter closes, it does not reopen. The communities built around them do not recover. That is not a theory. Ask Newcastle. Ask Witbank. Ask every town where Highveld Steel used to be.But here is the question I asked on public record today, and I want every South African to understand why it matters. Eskom told NERSA that it can be financially viable supplying electricity to these smelters at 62 cents per kilowatt-hour. In the same breath — in the same MYPD6 application to the same regulator — Eskom applied for a 36.15% tariff increase, arguing that without above-inflation increases, it cannot maintain the grid, cannot service its debt, cannot keep the lights on. It cannot be both things. Either 62 cents is viable, in which case somebody needs to explain why the rest of South Africa is paying 250 cents or even R11 per KWH for municipal electricity. Or it is not viable, in which case someone else is subsidising the difference — and that someone is every other electricity customer in the country.NERSA has to answer that question publicly. If the answer is cross-subsidy — which is almost certainly is — then the regulator must say so, design it properly, regulate it fairly, and stop pretending that each application exists in isolation from every other one.."If 62c/kWh is viable for one sector, it is viable. If the grid needs 36% more from everyone else to survive, that is a cross-subsidy — and NERSA must name it.".THE JOBS NOBODY WANTED TO PROTECT.I want to say something that is difficult to say in a formal hearing room but that I think must be said publicly. At some point, the question stops being about electricity and starts being about who benefits from things staying exactly the way they are.Municipalities employ thousands of people to administer electricity billing. NERSA employs people to process tariff applications. Eskom's bloated workforce — which has barely shrunk despite decades of underperformance — depends on the current revenue model staying intact. There are mayors and CFOs whose budgets depend on electricity margin. Landlords who have built profitable solar-and-resale businesses at their tenants' expense. And a regulatory system that processes applications one at a time, at small public hearings, in a framework that was never designed to ask the big question: is any of this still serving the public?I am not saying everyone in this system is corrupt, though some are. I am saying the system has become self-preserving. Every decision that protects Eskom's revenue is a decision that destroys someone else's business. Every tariff increase that covers a municipality's electricity losses is a tariff increase that closes a factory. The jobs on one side of that equation are visible and unionised and politically connected. The jobs on the other side accumulate quietly in retrenchment notices that get three paragraphs in a business publication and are never revisited.Three hundred thousand jobs. That is not a statistic. That is 300,000 families. 300,000 sets of school fees not paid. 300,000 people sitting in communities where the only industry that once existed no longer does. And none of them were represented at any of the hearings where the decisions were made that contributed to their unemployment..WE LIVE ON A COAL RIDGE — AND WE ARE PRETENDING OTHERWISE.I want to talk about what a real energy plan could look like, because too much of this conversation is about managing decline rather than engineering a way out.South Africa sits on the Bushveld Igneous Complex, one of the most mineralogically rich geological formations on earth. We have world-class coal reserves. We have consistent solar irradiation that is the envy of any renewable energy developer. We have wind corridors in the Eastern and Western Cape. We have the intellectual and engineering capital — the people, the universities, the technical institutions — to build a serious, diversified energy future. What we do not have is a government with a plan to get there quickly and cheaply enough to save what remains of our industrial base.Our coal fleet can be regenerated. Modern clean coal technology — used in Poland, Germany, Australia — can extend the life of existing power stations while dramatically reducing emissions. This is not a climate denial position. It is an honest acknowledgment that South Africa cannot deindustrialise its way to a green economy. People eat today. People need jobs today. You cannot tell a steel worker in Newcastle that the energy transition will create opportunities for him in ten years when his job is gone in ten weeks.We should be adding renewables as fast as the grid can absorb them — and we should be investing in expanding that grid's capacity to absorb them faster. The private sector has shown, without any government subsidy and against significant regulatory resistance, that it will build solar and wind capacity if the red tape is reduced. The REIPPPP programme — when it actually ran — proved this. Small-scale embedded generation — when municipalities stopped blocking it — proved this too. We just need to stop fighting the solution.And we need to have an honest national conversation about nuclear. I am not going to pretend that nuclear is simple or cheap or fast to build. It isn't. But South Africa already has Koeberg. We have the technical expertise. We have the strategic imperative. And we have a baseload problem — particularly for our largest industrial consumers — that renewables alone cannot fully solve. The conversation about nuclear has been politically poisoned in this country for long enough. It deserves a mature, technical, national debate. Not a political one.."You cannot tell a steel worker in Newcastle that the energy transition will create opportunities for him in ten years when his job is gone in ten weeks.".WHAT NEEDS TO HAPPEN — AND WHY IT HASN'T.The ferrochrome NPA should be approved today. I have said that clearly and I mean it. These operations must survive. But I am asking for something much larger than a tariff concession for two companies. I am asking for a national emergency response to an energy cost crisis that has already cost this country far more than anyone in power has been willing to publicly acknowledge.NERSA must stop processing tariff applications in silos. Every increase — Eskom, municipal, landlord — must be assessed against its total impact on the economy. Who pays? Which businesses close? Which communities collapse? This is not complicated analysis. It is the basic function of a regulator in a country where electricity costs have risen more than 1,100% in less than two decades.Landlords must be regulated. The electricity resale market — where a property owner installs solar and then charges tenants at municipal rates — is a legal grey area that NERSA has the authority to close. Every commercial tenant should have the same right to access competitive energy pricing that a property owner with their own Eskom connection enjoys. The law says landlords cannot profit on resale. NERSA needs to enforce it.Municipalities must stop using electricity as a cash cow. When Buffalo City Municipality loses R350 million in revenue to private solar, the correct response is not to increase tariffs on the customers who remain. The correct response is to restructure the business model. Municipalities should be in the business of delivering services, not extracting maximum margin from a monopoly on electricity distribution that is now, clearly, no longer a monopoly.The government must produce a plan. Not a white paper. Not a framework. A plan — with targets, timelines, costs, and accountability — for reducing South Africa's average electricity price by at least 30% in real terms over the next five years. That plan must include clean coal, accelerated renewables, serious nuclear consideration, and a regulatory streamlining programme that gets a wheeling agreement or an SSEG registration done in sixty days, not eighteen months..ENOUGH IS ENOUGH.I have been in this industry long enough to know that change in South Africa's electricity sector moves slowly, and usually only when the pressure becomes impossible to ignore. I believe we have reached that point. The factories are not just struggling. They are closing. The jobs are not just at risk. They are gone. The businesses that remain are spending a disproportionate share of their management energy not on growing their companies, but on surviving their electricity bills.I am submitting this article, and the research that underpins it, to every major South African news network alongside our formal NERSA public record submission. Because what happens in that hearing room today — and in every municipal tariff hearing and MYPD determination that follows — matters to every South African, whether they were in that room or not.South Africa is not an energy-poor country. We are an energy-poorly-governed one. That is a problem with a solution. But it requires the people making decisions in those small hearing rooms to finally, honestly, stop pretending that the decisions they make there don't have consequences that ripple across the entire economy.Three hundred thousand jobs later, we cannot afford to keep pretending..*Tommy Diedericks is Managing Director of Renew Consulting, an independent energy consultancy based in Johannesburg. He recently presented at NERSA’s public hearing into Eskom’s proposed Negotiated Pricing Agreement amendments with major ferrochrome producers, drawing on research into South Africa’s rising electricity tariffs and their impact on industry, jobs and competitiveness..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up to the BizNews channel here.

SA's electricity system: 300 000 jobs; a flawed system; zero accountability

Related Stories

By the numbers: Eskom's performance under Cyril's presidency

The hollowing out of Eskom: De Ruyter's prophecy becomes reality

Max Hastings: Iran - Flawed US diplomacy isn't the only path

Eskom’s tariff shock hits middle-class households hardest