The eSwatini Electricity Company (EEC) imports almost 80% of electricity from South Africa’s Eskom and Mozambique’s Electricidade de Moçambique, leaving EEC exposed to regional prices and supply disruptions.
An IMF assessment found that EEC’s operating profit turned negative in 2023/24 before deteriorating to a loss of about $15 million in 2024/25.
The decline reflected drought-related hydropower shortages, weaker electricity sales, large customers moving to self-generation and higher import costs following the expiry of a long-term Eskom contract.
EEC requested a tariff increase of about 25% for 2025/26. The regulator approved increases across two years, but the government delayed the adjustment and approved a single 11.7% increase for 2026/27 to limit pressure on households and businesses.
The IMF said tariffs remaining below cost-recovery levels were placing pressure on maintenance, infrastructure investment and cash flow.
EEC debt reached nearly $60 million at the end of 2025, equivalent to about 1% of gross domestic product. Cash constraints reportedly forced borrowing for wages, while some suppliers moved from credit arrangements to payment on delivery.
Under the IMF baseline, potential government exposure to EEC could reach 4.4% of gross domestic product by 2031/32.
The fiscal risk could rise to 9% under a moderate stress scenario and 13.9% under a severe scenario involving weaker growth, higher inflation, lower electricity sales and increased borrowing costs.
Losses could approach $120 million under severe conditions, with government recapitalisation of approximately $114 million required.
The IMF recommended a gradual move towards cost-reflective tariffs, accompanied by targeted protection for vulnerable households.
If government limits tariff increases for affordability reasons, the resulting subsidy should be funded and disclosed transparently through the national budget rather than absorbed by EEC.
Reducing electricity losses, improving metering and collections and expanding economically viable domestic solar, hydropower and biomass generation could reduce import dependence.
–IMF/ChannelAfrica–
