Energy expert Chris Yelland has also questioned<\/a> whether the job protection and specific economic benefits of NPAs with smelters outweigh the costs to the broader economy.<\/p>\n\n\n\nYelland wanted to know where the money would come from to support lower tariffs for the smelters, given that Eskom’s average cost to produce electricity was already 147 cents per kWh in 2024\/25.<\/p>\n\n\n\n
That would suggest the NPA’s costs would need to be subsidised in some way. “The question is who pays, because Eskom is not going just to give them that price,” Yelland said. <\/p>\n\n\n\n
“Is it you, me, and other businesses? Or is it the taxpayer? Is this money going to come out of the fiscus?”<\/p>\n\n\n\n
Nersa, Eskom, and the companies have asserted that the costs under the arrangement would be ring-fenced, although it is unclear exactly how this will be achieved financially or operationally.<\/p>\n\n\n\n
One provision to protect other customers is that a shortfall in revenue caused by the NPA may not be recovered through Eskom’s Regulatory Clearing Account.<\/p>\n\n\n\n
The mechanism allows the power utility to apply for additional increases based on past revenue shortfalls or to reduce increases based on revenue surpluses.<\/p>\n\n\n\n
Fullard has maintained that the newly approved NPA would not increase tariffs for general household users and businesses, but help avoid sharper hikes. <\/p>\n\n\n\n
“Everyone thinks that Eskom gave us the 62 cents per kWh, and the rest of South Africa is going to have to pick up the tab,” he said. <\/p>\n\n\n\n
He highlighted that the agreement would enable the two companies to buy R6.2 billion in electricity from the power utility that it would otherwise not have sold. <\/p>\n\n\n\n
With a large proportion of Eskom’s costs not being linked to the amount of energy it produced, it would still have incurred costs regardless of whether it burnt the coal or diesel for the NPA electricity. <\/p>\n\n\n\n
Fullard added that the NPA was not a “silver bullet” and would not be a sufficient cost mitigator that guaranteed the future sustainability of the smelters.<\/p>\n\n\n\n
He explained that the smelters had to adapt and integrate new, more efficient technology, or they could find themselves in the same position if China continued to reduce industrial electricity tariffs.<\/p>\n","protected":false},"excerpt":{"rendered":"
It is unclear how Eskom can practically afford to give the two smelters the preferential tariffs without regular users subsidising some of the cost.<\/p>\n","protected":false},"author":341042,"featured_media":639606,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27995],"tags":[10034,28392,59903,181,104897,105725,24740,99113,100340,102795,103244,105724,99110],"class_list":["post-651953","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-chris-yelland","tag-electricity-prices","tag-electricity-tariffs","tag-eskom","tag-glencore-merafe-2","tag-japie-fullard","tag-national-energy-regulator-of-south-africa-nersa","tag-negotiated-price-agreements-npas","tag-negotiated-pricing-agreement-npa","tag-samancor","tag-samancor-chrome","tag-smelter-furnaces","tag-smelters"],"_links":{"self":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/651953"}],"collection":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/users\/341042"}],"replies":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/comments?post=651953"}],"version-history":[{"count":18,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/651953\/revisions"}],"predecessor-version":[{"id":652321,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/posts\/651953\/revisions\/652321"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media\/639606"}],"wp:attachment":[{"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/media?parent=651953"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/categories?post=651953"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mybroadband.co.za\/news\/wp-json\/wp\/v2\/tags?post=651953"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
![\"\"](\"https:\/\/mybroadband.co.za\/news\/wp-content\/uploads\/2026\/06\/Japie-Fullard-Glencore.jpg\")