Huge blow to Eskom’s ‘secret’ R54 billion deal
The ‘secret’ R54 billion settlement deal between power utility Eskom and energy regulator Nersa has been nixed by the High Court, until the public has been sufficiently consulted.
Nersa revealed in August 2025 that it had reached a settlement with Eskom behind closed doors, allowing the utility to collect an additional R54 billion in revenue from tariff hikes in 2026 and 2027.
This was because Nersa had erred in its calculations when determining the allowable revenue in Eskom’s MYPD6 application.
According to Eskom, R107 billion was excluded by Nersa; however, through the settlement, R54 billion would be collected over the next two years, with the balance to be drawn in thereafter.
Because of this settlement, the electricity price hikes for 2026 and 2027, already running at double the inflation rate, would have been close to 9% for each of the next two years, almost triple the inflation rate.
For context, the price of electricity has surged 265% over the past decade or so, higher than the 151% inflation.
Salaries have not kept pace with rising costs, placing South African households under immense strain.
Once the secret settlement came to light, the public backlash was immediate.
According to energy expert Chris Yelland, the R54 billion error by Nersa was “absolutely astounding”, especially in the context of how much Eskom has cost the country.
He stated that massive, undeclared, imprudently incurred, and inefficient costs at Eskom have been passed on to customers in the form of higher tariffs over the past ten years.
Eskom has long argued that its exorbitant tariff hikes are so that South Africans pay prices that reflect the cost of producing electricity.
However, the “cost” aspect also includes a decade of inefficiencies and procurement corruption at the company, where it has overpaid inflated invoices and burnt through billions of rands in diesel.
Considering this, Nersa should claw back these costs on behalf of electricity customers in the form of reduced tariffs, Yelland said.
Instead, Eskom has gone the opposite direction, forcing customers to pay even higher tariffs, even as demand drops and it lays out ambitious expansion plans.
Following the revelation of the R54 billion clawback, lobby group AfriForum and the Minerals Council of South Africa applied to the court to intervene.
One of the key challenges was that neither Nersa nor Eskom consulted with the public in settling, nor were any details provided on how the number was reached.
Nersa had argued that it wasn’t necessary to consult the public. However, the opponents argued that South Africans in general would be affected by the settlement and thus had a direct interest.
In a ruling handed down on Sunday, the High Court agreed with the applicants, ordering Nersa to launch a public consultation process before making a final determination.
The court also noted that there was no explanation for the parties reaching R54 billion as the settlement amount, describing it as a “thumb suck”.
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