Given its recent history, the fact that Eskom is even able to contemplate entering into a 62c/kWh tariff deal with the ferrochrome industry is remarkable. It is a clear indication of how far the utility has come from the dark period of daily (sometimes twice daily) loadshedding, which demoralised the nation and made South Africa a no-go zone for investors.

CEO Dan Marokane underlined this point when announcing on April 10 that it had concluded agreements with the Glencore-Merafe Chrome Venture and Samancor Chrome on a five-year tariff dispensation following difficult negotiations on the terms and conditions.

He said that without the success of Eskom’s turnaround over the past three years, which restored consistent baseload electricity supply, “we would not have been in a position to support the ferrochrome industry or play a meaningful role in preventing job losses”. This is undeniable and should be a source of much satisfaction for the Eskom leadership and its more than 40 000 employees.

Eskom has also indicated that it intends to find additional markets for its current surplus and has stated that it will seek to support other ferroalloy sectors, as well as the iron and steel industry, in keeping with a commitment made by Electricity and Energy Minister Dr Kgosientsho Ramokgopa that tariff support will not be confined to the ferrochrome industry.

While the benefits of sustaining critical minerals beneficiation capacity are real and alluring, particularly in an unfolding geopolitical context where countries will be seeking to diversify supply, there are always costs.

To date, these costs and how they will be funded have not been fully made public. Although Marokane has indicated that an outstanding R10-billion transfer from the National Treasury linked to the bigger R230-billion Eskom debt-relief package will be used to close the revenue gap in the first year. He also indicated that future shortfalls could be met partially through cost-saving efforts, with Eskom having set a cumulative savings target of R112-billion by 2029.

Traditionally, however, there have been only two sources on which Eskom has drawn to cover the revenue gaps arising from negotiated pricing agreements with large industrial customers: other consumers and the taxpayer.

Ramokgopa has indicated that this cannot be the case with these new pricing agreements, but has not provided details as to how this can be avoided. Eskom has indicated that the details will emerge during the National Energy Regulator of South Africa’s (Nersa’s) public-participation process required before the tariff is approved.

A sentence in the Eskom statement confirming the agreement should trigger some transparency alarm bells, however. It reads: “The dissemination of specific agreement details falls under Nersa’s purview, and the extent of such disclosure will be governed by its internal protocols and regulatory limitations, in line with the need to respect the commercial confidentiality of Samancor Chrome and Glencore-Merafe Chrome.”

Given the size of the subsidy, transparency should be a bare-minimum condition and Nersa, on behalf of all other consumers, must insist on full disclosure.