South Africa’s free electricity failure

Government’s free basic electricity (FBE) programme has failed to provide financial relief to poor South Africans, according to environmental researcher Dr Neil Overy and EarthLife Africa Johannesburg programs manager Thabo Sibeko.

In a recent Sunday Times article, the pair pointed out that the FBE programme had two key problems.

They explained that households who qualify for FBE only receive 50kWh of free electricity in a month, an amount which was set all the way back in 2003.

This is far below the current consumption levels, with smaller households typically consuming between 300kWh and 400kWh in a month.

2023 research by the Public Affairs Research Institute found that the monthly allocation should be 350kWh, seven times the current figure.

In addition, the vast majority of those households who qualify for FBE are not getting it, due to grossly misgoverned municipalities.

Only about two million of the 10 million households that should qualify for FBE are currently benefiting from the scheme, less than a quarter of the total.

One example of this failure is in the City of Johannesburg (CoJ), as energy expert Chris Yelland previously explained.

“According to the equitable share grant from National Treasury to the CoJ for free basic electricity, there are about 950,000 indigent households in the City of Johannesburg metropolitan area that should be receiving free basic electricity,” Yelland said.

“The City of Johannesburg’s own data shows that about 670,000 households live below the lower-bound poverty line.”

“However, self-reported data by the City in the annual StatsSA non-financial census of municipalities further indicates that just under 30,000 indigent households are on the indigent register to receive free basic electricity.”

“This means that some 95% to 97% of all indigent households in the Johannesburg metropolitan area are in fact not on the indigent register of the City to receive free basic electricity.”

Overy and Sibekoi said the reason for the incorrect distribution of the scheme was dysfunctional municipalities with poor oversight, which absorbed funds from National Treasury earmarked for FBE into their general budgets.

“The FBE system needs a complete overhaul,” the pair said.

Eskom’s funding model broken

In addition to changing FBE, the pair called for Eskom’s entire funding model to be revamped.

Overy and Sibeko explained that even though Eskom has been able to keep the lights on and supplied electricity reliably, it would struggle to sell electricity at its current tariffs.

In addition, the power utility has applied for an astounding 36.15% increase in direct customers’ electricity tariffs in 2025, with more above-inflation increases in the following two years.

The pair said that some within civil society believe that if Eskom cannot produce affordable electricity, then its cost-recovery model, which dictates tariffs, is not fit for purpose.

“The fundamental and inherently moral question that needs to be asked is: Should a public entity providing an essential public service be governed by cost-reflective pricing?” the pair questioned.

They also pointed out that the main reason Eskom could not produce affordable electricity was two decades of corruption and managerial incompetence, which caused its costs and debts to spiral.

Overy and Sibeko said electricity minister Kgosientsho Ramokgopa’s comments about addressing energy poverty were “rhetoric” when considering the government’s energy procurement plans were not focused on lowest-cost generation.

“The draft Integrated Resource Plan artificially curtails the amount of renewables that can be built, while greatly expanding more costly gas generation,” they argued.

“In addition, the government’s witless determination to pursue new nuclear power promises to bring the most expensive form of utility-scale electricity generation into the energy mix.”

“Until these fundamental problems are addressed, South Africans should sadly expect yet more double-digit tariff increases from Eskom.”