South African consumers should not be forced to subsidise failures of state-owned entities emanating from poor management and corruption, experts say.

A governance expert, an economist, and a non-governmental organisation state that the attempt to recover Eskom’s revenue shortfalls should not be passed on to already struggling communities and businesses. 

This is after the National Energy Regulator of South Africa (Nersa) closed its public consultation process on January 21, 2026, regarding a multi-billion rand error.

In 2025, Nersa admitted to a R54 billion miscalculation, stating that in its assessment of Eskom’s review application, it identified errors that resulted in underestimation in certain components of Eskom’s application.

Nersa then entered into a private settlement with Eskom on July 30, 2025.

The settlement, which did not include public consultations, faced a legal challenge, and the Gauteng High Court in Pretoria rejected it, prompting Nersa to initiate a process of getting public comments.

If approved, this R54bn settlement could result in significantly higher electricity tariff increases of 8.76%, compared to the initially projected 5.36% for April 2026. For 2027, it would be 8.83%, up from 6.19%.

Professor William Gumede, a governance expert from the University of the Witwatersrand, stated that the public has been subsidising the failure, corruption, and incompetence of state-owned entities. 

“Ordinary citizens don’t understand that if an entity fails, they are paying for it. For example, we are here with Eskom because the ANC deployed incompetent people to the deployment committee, there is corruption in the tenders, and so on. Even the Medupi and Kusile, which are among the cases that have run over R200bn, are a result of corruption and cadre deployment,” Gumede said.

He highlighted that the business model of state-owned entities in South Africa over the last couple of years has pushed all failures to be subsidised by ordinary citizens. As a result, ordinary citizens are punished doubly, through higher prices, because state entities just transfer the pricing of their own failure and corruption to the public by increasing the prices.

“We are actually subsidising failure. It’s like we’re stuck in a loop. If the public doesn’t speak, as consumers, we will always be paying for the failing entities just like Eskom,” he stated.

Gumede said that Nersa cannot assume that they are starting on a clean slate by holding a public consultation process. 

“We need accountability, who made that mistake? As these public consultations continue, we need the board or the executive to resign,” he said.

Gumede questioned the silence of opposition parties in the Nersa, Eskom miscalculation saga.

“The people who actually went to court were the Mineral Council of South Africa and AfriForum. Where are the opposition parties? The role of opposition parties is to identify these issues, expose them, protest, etc., so why are they quiet? Do they even know what’s going on in the country? We have to criticise the opposition parties, because they are asleep here. Where is the official opposition party?” Gumede stated.

He said there is a need for more consumer civil society organisations to raise these issues, because they affect every person. 

“We need to have members of parliament, including the President, pay for public services in the same way ordinary citizens do, so that they can also feel price increases. Probably, they would become more proactive, when they are closer to the experience of ordinary citizens,” he said. 

Currently, members of the executive (ministers and deputy ministers) are often allocated specific state-owned prestige houses, and the taxpayers, through the Department of Public Works and Infrastructure is responsible for the water and electricity costs of these official state-owned residences.

However, there is a limit of R5,000 per month for water and electricity that the state pays for, with exceeding costs being paid for personally by the executive member. The MPs personally pay for all water and electricity at their private residences.  

Dawie Roodt, chief economist at Efficient Group, previously stated that the impact of this error is going to be devastating for the economy, which is not growing, and that the economic growth for this year is well below 1%.

“Any price increase spills over to other things, like food prices, and it will put pressure on inflation, especially for low-income households. It has a negative impact because the paying customers will run away, and look for alternative sources, and that will cause a dent in Eskom’s finances,” Roodt said.

He added that neither Eskom nor Nersa knows what the price of electricity should be because the price of anything is only what people are prepared to pay. It doesn’t matter if it’s diamonds or electricity or bread. The only way you can determine what the price of a thing is is for that thing to be traded freely in the market.

Non-governmental organisation, The Green Connection, stated that Eskom’s attempt to recover revenue shortfalls should not be passed on to already struggling communities.

The Green Connection’s Programmes and Advocacy lead, Lisa Makaula, said: “Ordinary people should not be burdened by regulatory or institutional failures. With these persistent price hikes, millions of households may be forced to make difficult choices between basic needs such as food, schooling costs, and/or electricity.”

She called on Nersa to redetermine Eskom’s multi-year tariff structure and propose a structure that is genuinely in the public interest.

“Nersa is bound by the environmental obligations set out in section 2 of the National Environmental Management Act (NEMA). These principles require that social, economic, and environmental impacts are properly considered, that decisions are taken openly, and that access to information is guaranteed. These are not optional extras – they are legal obligations,” Makaula said.

The organisation also called on Nersa to reject further Eskom electricity tariff increases and rising power prices under the Sixth Multi-Year Price Determination (MYPD6).

Charles Hlebela, Nersa spokesperson, previously stated that, “Notwithstanding this error, it must be stated that the cumulative balances principle was properly applied for transmission and distribution businesses. After rectifying these errors, Nersa concluded that Eskom was entitled to an additional R54bn over the three-year MYPD6 period, an amount substantially lower than Eskom’s original claim of R107bn.”

gcwalisile.khanyile@inl.co.za

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