Eskom settlement to raise electricity prices in 26 27.2728

Eskom settlement to raise electricity prices in 26 27.2728

South Africa's state-owned power utility, Eskom, has announced a settlement that will result in a significant increase in electricity prices. The new rates, effective from July 2025, are part of Eskom's broader efforts to address financial distress and ensure the sustainability of its operations.

The price hike, which is expected to be the largest in the country's history, is aimed at covering Eskom's debt and improving its financial health. The utility has been struggling with high levels of debt and operational challenges, which have led to frequent power outages and financial strain.

According to the Department of Trade, Industry, and Competition, the price increase will have a profound impact on South Africa's economy and could stifle efforts to address climate change and decarbonize the economy. The department has called on the European Union to reconsider the implementation of its carbon border adjustment mechanism (CBAM) and extend the same flexibilities offered to the US to South Africa and other African countries [1].

The CBAM, which is designed to reduce emissions by ensuring imports are subject to the same surcharges as domestically produced goods, could negatively impact South Africa's exports. The country, which is the world's 14th-largest producer of greenhouse gas emissions, relies heavily on coal for electricity generation. Approximately 422,000 South African jobs are supported by exports to countries with active or incoming CBAMs [1].

The new electricity prices will affect both residential and commercial consumers. The exact percentage increase is yet to be finalized, but it is expected to be substantial. The government has assured that the increase will be necessary to ensure the long-term viability of Eskom and prevent further financial instability.

In addition to the price hike, Eskom has also announced plans to reduce its debt through a restructuring process. The utility has been working with the government and other stakeholders to develop a comprehensive plan that will address its financial challenges and improve its operational efficiency.

The impact of the price increase on South Africa's economy remains to be seen. While it is expected to help Eskom's financial situation, it could also lead to increased costs for businesses and consumers, potentially slowing economic growth. The government has emphasized the need for a balanced approach that addresses both Eskom's financial needs and the broader economic implications.

References:
[1] https://www.bloomberg.com/news/articles/2025-08-27/south-africa-wants-same-eu-carbon-border-tax-flexibility-as-us