SOUTH Africa’s energy regulator Nersa has granted Eskom permission to reduce electricity charges for Glencore-Merafe and Samancor smelters from 136 SA cents per kilowatt-hour to 87c/kWh throughout 2025, said online publication Moneyweb on Friday.
The January 29 decision, applicable only to these two customers, remains contingent on government approval of a funding mechanism to bridge the gap between current negotiated pricing agreements and the reduced rate. Nersa will consider similar applications from other smelters experiencing financial hardship as they are received.
The regulator had previously granted the companies a six-month exemption from minimum electricity purchase requirements under their existing agreements, said Moneyweb. An Eskom application to extend this exemption, which expires at month-end, has not been processed, it said.
At the reduced tariff, Eskom covers variable costs plus contributions towards open-cycle gas turbines, renewable energy legacy charges and household subsidies, though fixed costs remain unmet. Other electricity users currently subsidise the two smelters by R6.5bn monthly.
However, the concession aims to preserve thousands of jobs across the value chain. High electricity costs have rendered South African smelters uncompetitive globally, with closures threatening additional burden on remaining customers. Should these facilities shut permanently, other users would face an estimated R12bn cost increase, with further escalation likely if additional smelters cease operations.
Eskom has indicated government officials have made substantial progress developing the required funding framework.
