While load shedding may be a thing of the past, as 79% citizens now rely on prepaid electricity, loading only what they can afford.
Image: Supplied
South Africa's energy crisis might have just shifted from reliability to affordability for South African consumers.
While load shedding may be a thing of the past, as 79% citizens now rely on prepaid electricity, loading only what they can afford.
This was according to the latest Debt Rescue survey, which was conducted to better understand the socioeconomic challenges facing South African consumers and how they are dealing with them.
CEO of Debt Rescue, Neil Roets said that the results paint a grim picture of a cold, dark winter ahead for most households.
Data from the survey revealed that, ahead of the April electricity tariff increase, 86% of people could already no longer afford the cost of electricity, and have been cutting back on essentials such as groceries or transport, just to be able to afford to keep the power on, despite already doing everything they can to minimize costs.
Nearly 80% of the respondents said they believe the latest electricity increase will have a significant impact on their monthly budgets.
Roets added that the timing couldn't be worse for struggling South Africans, as the Nersa-approved 12.7% electricity tariff increase came into effect on 1 April 2025, with a possible VAT hike looming on 1 May.
“This will make basic essentials even less affordable for the average consumer and could make the challenges of recent months feel mild by comparison,” he said.
Eskom's restructured electricity tariffs that took effect on 1 April means that their customers face a 12.74% average increase in electricity prices for the 2025/26 financial year.
This was based on a study by EE Business Intelligence conducted for the Organisation Undoing Tax Abuse (OUTA) on the impacts of tariff increases on Eskom’s direct residential customers. The new structure includes three main residential tariff options, namely Homelight, Homepower, and Homeflex, each designed to suit different consumption patterns and needs.
"Despite all good intentions of making pricing more equitable, many low-income households will be hit hard by the higher energy costs. This begs the question whether subsidies are the best path forward to protect low-income households," Roets said.
“I wholeheartedly support subsidies to protect indigent households. With more than 80% of indigent households in South Africa not on the relevant municipal indigent registers, it is crucial that government ensures that this happens quickly," Roets further added.
Energy expert Patrick Narbel pointed out that most residential users are on the Homepower tariffs, and that the latest hike will see residential consumers digging deep into their pockets.
"This tariff has a fixed fee, which has risen by almost 90% and has a variable fee that used to be split for the lower 600 units you consume in a month and above that at a higher price. Not so anymore. So that means if you use 600 units or less, your tariff will increase by approximately 20%," Narbel said.
“Eskom and the Energy regulator Nersa are clearly out of touch with the reality of the average South African, and oblivious to the fact that more than half the nation is struggling to put enough food on the table and will battle to keep their families warm during the fast-approaching cold winter months. Against this backdrop of financial distress, it is unconscionable that Nersa took a decision that places this basic utility out of reach of millions of people nationwide,” Roets said.
Another major factor is that the rand remains under severe pressure, caught in the crossfire of global and local instability.
One major threat stems from the ongoing impact of international trade tensions, while the potential collapse of the Government of National Unity (GNU) adds to the uncertainty.
According to the Bureau of Economic Research (BER), South African consumer confidence plunged to its lowest level since 2023, putting the country’s economic recovery at risk.
Momentum Investments chief economist Sanisha Packirisamy said that this outcome is a result of the government’s proposed two percentage point hike for VAT in the initial February Budget.
Amidst the ongoing debate within the GNU, the National Treasury has gone ahead and introduced the Rates and Monetary Amounts and Amendment of Revenue Laws Bill on 4 April, by notice in the Government Gazette.
The draft bill, as published on 12 March, provides for the highly disputed value-added tax (VAT) increase, that will hike the rate from 15% to 15.5% on 1 May this year and from 15.5% to 16% on 1 April 2026.
“The impact of a VAT hike on South Africans should be the top concern among the country’s leaders right now. At this point it will be the straw that breaks the camel’s back,” Roets said.
“There has been a relentless onslaught on the pockets of hard-working consumers, with food prices escalating and not re-adjusting, consistently high interest rates since 2021 and electricity and water prices fast moving out of reach of ordinary citizens. How long before the weight becomes too much to carry?” he further said.
Roets added that the reality of the proposed VAT increase is that it will inevitably result in a rise in living costs across the board.
“As the cost-of-living increases, ordinary citizens will have less disposable income. If spending is not decreased – and in light of the expected rise in the cost of goods, based on the projected consumer price inflation of around 4.5%, this is simply not possible for millions of consumers – and will inevitably lead to increased debt. My advice to those who cannot break free from their financial constraints is to seek help from a registered debt counsellor who can assist them to manage their financial predicament. This has been a very successful solution for thousands of consumers who are plagued by over-indebtedness,” Roets said.
BUSINESS REPORT
