In light of the ongoing public hearings convened by the Eswatini Energy Regulatory Authority (ESERA) on the Eswatini Electricity Company’s (EEC) tariff adjustment application, a number of questions, concerns and misconceptions have emerged from customers, businesses and the broader public.

This advertorial has been developed to provide additional clarity and factual context on the rationale behind EEC’s tariff adjustment application. The questions and responses that follow are drawn directly from issues raised during ESERA’s public hearings, written submissions, and broader public discourse.

It is important to emphasise that the tariff adjustment request is not driven by inefficiencies within EEC or a pursuit of excessive revenue, but by externally imposed and unavoidable increases in the cost of imported electricity, following the expiry and renegotiation of key power supply contracts. These cost increases were not anticipated in the assumptions underpinning the previously approved tariffs. Secondly, the under-recovery is from last financial year’s audited financial statements.

The purpose of this content is to ensure that customers and stakeholders are equipped with accurate, transparent and balanced information to better understand the financial, regulatory and energy security considerations informing EEC’s application, and the potential implications for the country should these costs remain unfunded.

What is the core driver of the tariff adjustment request?

The primary and most critical reason for this adjustment request is not due to EEC's operational inefficiencies or a desire for increased revenue, but a direct result of unexpected and externally imposed costs for importing electricity.

• The Approved vs. The Actual: ESERA approved EEC's tariffs for 2025/26 and 2026/27 based on a set of assumptions, particularly regarding the cost of power bought from neighbours. These assumptions have fundamentally changed.
• Renegotiated Contracts: Key long-term power supply agreements expired and were renegotiated in 2025/26 at higher prices, especially the major contract with South Africa's Eskom (NTCSA).
• The Financial Gap: Due to these renegotiations, EEC now faces a verified shortfall of E175 million over the year just to cover the increased cost of imported power. This cost was not provided for in the already-approved 7% increase for 2026/27. Additionally, EEC incurred costs higher than what was approved, resulting in an under-recovery of E262 million.

The narrative that this is an "unjustified" corporate request is incorrect. The request is a specific adjustment to cover these verified, external import costs that threaten the company's ability to pay for the electricity it supplies to the nation and cover operational costs.

Why can’t EEC cushion customers on the tariff?

EEC has managed to contain its operational costs within inflation. Unfortunately, EEC is unable to control import costs, which have increased by double digits. This has resulted in EEC operating an overdraft for the past two years, which has since escalated to E195 million. EEC can no longer cushion these costs, hence the tariff adjustment application to ESERA. The losses incurred by EEC have therefore not been because of any inefficiencies within the Company, but purely due to external factors not within the control of EEC. The utility had already implemented extensive cost-containment measures, including:

• Freezing capital projects
• Reducing operational expenditure
• Maximising its overdraft facilities

Despite these efforts, the scale of the import cost increases is too large to absorb internally. EEC is projecting a cashflow deficit of E231 million by March 2026 and a huge operating loss, which was E391M in November 2025, which makes continued absorption unsustainable.

Can EEC reduce salaries to cushion the tariff

EEC’s salaries are controlled by the Public Enterprise Unit (PEU) and are within industry limits. EEC’s financial statements do indicate that operational costs, which are inclusive of staff costs have been maintained over an extended period, with relatively low  increases clearly shown in the Annual Report. Hypothetically, if all EEC staff were to be released from their employment, this would be an extremely insignificant reduction on the tariff adjustment currently being requested on the domestic customer. In fact, EEC is losing an unprecedent number of highly specialized skills to the private sector. These are the skills that enable service delivery to our dear customers.  

The coal powered power station is a low-hanging fruit, why can’t EEC focus on this?

It is worth noting that procurement of new capacity/power supply, in terms of section 25(1) of the Electricity Act, 2007 is not by the EEC, but the Regulator in conjunction with the Ministry of Natural Resources and Energy. However, EEC is pleased with the granting of the coal fired thermal plant mining license to its subsidiary company, and development activities are ongoing. These are inclusive of the appointment of a transactional advisor for the review of EEC’s drilling exploration, reserve modelling & optimization, mine plan & design, to be considerate of environmental concerns and financial modeling.

While the coal fired power plant is being considered, there is also a need to consider the geothermal power plant, which is not far-fetched from reality as we are being assisted by Kenya Generation Company (KenGen), who are industry experts in the field and have proven and existing plants in their country. This project requires E220 million funding. EEC is also exploring the Maguga 10MW hydro power expansion, which also requires about E470 million funding. EEC does not have the required funds for these projects, but is looking for funding partners. 

Can EEC be de-registered as a company and be reverted to being a Government department?

It is worth mentioning that EEC is wholly owned by the Government of the Kingdom of Eswatini, despite being a company. Therefore, EEC cannot be separated from Government.

Is it not time for EEC to have a competitor?

EEC does not operate as a monopoly as the energy sector was liberalised through the Electricity Act in 2007. A number of Independent Power Producers (IPPs) have joined the electricity generation space. Recently, the Regulator engaged stakeholders on a wheeling framework, which speaks to the transmission of electricity. Distribution also does exist for  some IPPs, some whose licenses have been approved. However, competition at distribution level is costly and not practical as it would entail IPPs to set-up their own distribution lines in the country creating a cobweb of electricity infrastructure, an arrangement that would hardly pass the safety test.

What is EEC’s position with regards to solar?

EEC is in support of home-owned solar panels for personal use by customers, which can contribute to the reduction of the country’s energy demand. Solar power generation by Independent Power Producers (IPPs) is also welcome to contribute to the EEC grid. However, solar without battery storage is intermittent and cannot provide baseload as its generation is significantly negatively impacted by weather conditions and time of day, because sunlight is not always available. EEC still needs baseload supply. However, it is required that they be registered with EEC for safety and quality requirement purposes. No charges are required for such a registration to EEC.

What happens if the tariff adjustment is not approved?

If the adjustment is not granted:

• EEC faces severe liquidity risks
• EEC will not be able to supply power and restore power outages as expected
• It will fail to comply with power import contracts
• It will be unable to provide required security guarantees of about E200 million by 2027
• The security and reliability of national electricity supply will be compromised

The risk is not just financial - it directly affects the country’s energy security.