Eswatini Electricity Company faces financial strain amid rising procurement costs
By Siphesihle Dlamini
The Eswatini Electricity Company (EEC) is navigating a complex financial landscape as it strives to balance customer service with the rising costs of electricity procurement.
With a customer base of nearly 299,000, including 277,312 domestic users and 20,582 small commercial enterprises, the EEC is poised to play a pivotal role in the nation’s economic stability.
However, the financial projections for the upcoming fiscal year reveal significant challenges that could impact both operations and customer tariffs.
Ernest Mkhonta, Managing Director of EEC, stated, “As we look ahead to the 2024/25 financial year, we anticipate energy sales reaching 1,181 GWh, which is crucial for sustaining our operations and meeting the growing electricity demand.
” The current national population is estimated at 1.231 million, and with electricity access having increased to 82 per cent by March 2024, the EEC is focused on expanding this access to 88 per cent by March 2025.
Despite these optimistic projections, the financial outlook for the EEC raises concerns. The company expects the National Transmission System Charge Account (NTSCA) bill to surpass E200 million monthly, while total power procurement costs are projected to be around E235 million.
Mkhonta elaborated on this, saying, “Our monthly sales revenue averages E252 million, but with procurement costs soaring, we are facing a cash position that will be highly overdrawn in the coming months.”
The financial strain is evident in the projections that indicate a significant decline in the company’s bank balance, which is expected to drop from E48 million in June 2025 to a staggering deficit of over E292 million by September 2025. This alarming forecast underscores the need for immediate strategic adjustments.
In its unaudited figures for 2024/25, EEC reported energy sales of 1,181 GWh and a sales revenue generation of E2.95billion. However, the reliance on imported power, which constitutes 1,084 GWh of total energy supply, raises questions about sustainability and cost-effectiveness.
Mkhonta emphasised, “While local power generation stands at 280 GWh, our dependence on imports makes us vulnerable to fluctuations in global energy prices.”
To address these financial challenges, the EEC has proposed tariff increases exceeding 25% per year. However, the government has only approved increases of 8 per cent for FY2025/26 and 7 per cent for FY2026/27, which Mkhonta acknowledged as insufficient.
“The approved tariff increases do not align with our operational costs and the necessary investments in infrastructure,” he noted. This discrepancy could lead to further financial strain on the company and potentially affect service delivery to customers.
The company’s commitment to large commercial clients remains strong, as they are viewed as the backbone of Eswatini’s economy.
Mkhonta stated, “We recognise the importance of our large customers and are dedicated to providing them with reliable electricity, which is essential for their operations and the overall economic growth of the country.
” As the EEC prepares for the upcoming financial year, the focus on maintaining and expanding electricity access while managing costs will be critical.
With nearly 803 employees and an additional 1,050 contractors, the company is not only a significant employer but also a vital component of the nation’s infrastructure.
