Eskom CEO warns of higher electricity prices in South Africa

Eskom CEO Dan Marokane has warned that electricity tariffs are still not cost-reflective, indicating that they may rise further in the coming years. 

Marokane said the utility is working closely with the Electricity Ministry to make significant changes to how electricity tariffs are calculated in South Africa to bring some relief to consumers. 

Electricity prices in South Africa have risen by 1,000% in the past twenty years as Eskom’s operational costs have risen and its significant debt burden results in substantial interest payments. 

Marokane admitted to Newzroom Afrika that higher tariffs are a major factor behind the utility’s first profit since 2017. 

However, they do not tell the full picture according to Marokane, with improved operational performance resulting in significant diesel savings. 

The ongoing debt relief programme from the National Treasury translating to reduced debt-servicing costs. The utility also benefitted from a once-off diesel tax rebate from SARS worth around R9 billion in the 2025 financial year. 

“I just want to remind you that we are very sensitive to the fact that consumers are feeling the pain of high electricity prices,” Marokane said. 

“But, I must tell you that these prices are still not cost reflective and Nersa will be the first to tell you that the price path to ensure prices reflect costs has not reached its end yet.”

This may result in higher electricity prices in the coming years as Eskom charts a path towards financial sustainability, where it can service its own debt without taxpayer bailouts. 

Electricity tariffs are set to rise by 8.76% in the next financial year, followed by a further 8.83% increase in the 2027/28 financial year. 

Eskom estimates that by the end of 2028, the utility will be on a sustainable financial footing and able to service its debt from the cash it generates. 

“We need to find a happy medium that keeps everyone happy and balances the need for Eskom to be financially sustainable while minimising the impact on consumers,” Marokane said. 

Relief on the cards

Marokane and Electricity Minister Kgosientsho Ramokgopa have outlined plans to ease the pressure of rising electricity prices on consumers.

“What we need to do, as a country, is get to a point of agreement on a new price path that solves the problem for the poor, deals with stimulating the economy, and ensures the sustainability of the utility,” Marokane said. 

“The Ministry is driving this process of reviewing South Africa’s electricity pricing policy, and then we can, as a country, agree on what is best for us.”

It is unclear when this review will be finished and how Electricity Minister Kgosientsho Ramokgopa plans to balance relief for consumers with Eskom’s sustainability. 

Ramokgopa has directed his Ministry to find ways to alleviate the pressure from rising electricity prices and has brought Eskom to the table.

“I have repeatedly made the point that electricity is unaffordable. It has now reached the point where the situation is untenable,” Ramokgopa said. 

“Households are finding it difficult to keep up with the increases and the rapid erosion of their disposable income. Companies are also increasingly becoming less competitive. So, again, it is an existential problem.”

“Our intention is that, by the first half of next year, we will have concluded a review of the policy, with it requiring robust and thorough discussion,” Ramokgopa said. 

“It is not a review that is isolated to smoke-filled boardrooms and the enlightened. It must go to every corner of the country.” 

Ramokgopa said only one or two things need to be finished up before the plan is presented to the Cabinet and implemented.

The Organisation for Economic Co-operation and Development (OECD) has argued that the only way prices can be driven downwards is through investment in new generation capacity with cheaper technologies.

It explained that South Africa’s electricity sector is one of the least competitive in the world, with the country being reliant on a single provider, Eskom, for most of its electricity. 

A more competitive sector will bring in new players, reduce the reliance on Eskom, and aid investment in new and cheaper technologies. 

The OECD said a fundamental restructuring of the entire electricity supply chain is needed to ensure long-term electricity security. 

This includes establishing a competitive market, opening the distribution segment to include private operators and strengthening municipal financial and managerial capacity.