Will the promise of free basic electricity secure votes and is it even a viable solution?

Electricity and energy minister Kgosientsho Ramakgopa is being warned not to put the cart before the horse in suggesting an increase in the free basic electricity (FBE) threshold.

Indigent households currently receive 50kwh of free electricity, with Ramakgopa stating last week that this could increase to as much as 300khw.

This would be coupled with a rigid social grants database that would ensure that those who were the most impoverished were given access to free electricity.

The ANC’s manifesto launched this weekend supported the minister’s vision in another document that made sweeping promises to potential voters.

“We will increase the monthly FBE threshold for qualifying households in line with changing consumption needs, strengthen municipal capacity for electricity self-generation, and introduce a transparent, unbundled municipal electricity bill so that residents can clearly see what they are paying for,” the ANC manifesto stated.

Will taxpayers fund free electricity?

South Africa’s social grant spending already sits at a budgeted R292.8 billion, just under 11% of finance minister Enoch Godongwana’s R2.67 trillion budget for the 2026-27 financial year.

Municipalities already owe Eskom over R100 billion and Godongwana previously stated municipalities needed to “return to the foundational principle of fiscal integrity” by ensuring Treasury’s grants were spent responsibly.

“Revenue collected for a specified function must first sustain that function before any cross-subsidisation can occur,” said the finance minister.

Ramakgopa said National Treasury gave municipalities a combined R21 billion per year for the express purpose of FBE, while admitting not all made it to its intended target.

Energy analyst Chris Yelland stated that the plan shouldn’t be ‘trumpeted as a great achievement ‘, explaining that increasing the FBE threshold sixfold would create an R80 billion shortfall.

“The minister says this new arrangement is not going to cost the fiscus any more, but who is going to pay the other R80 billion? That hasn’t been answered.

“I can assure you Eskom doesn’t have R80 billion to fund this, and so the only other way is to raise it from the taxpayer.

“If you make political promises before an election, it’s best to know where the money is coming from,” Yelland told The Citizen.

‘Fiscally neutral by design’

Ramakgopa and the ANC highlighted the country’s improved energy situation, most notably 400 days without loadshedding and a 10% improvement in Eskom’s energy availability factor.

Political analyst Professor Andre Duvenage reminded those popping champagne about the underlying causes of those improvements.

“The reason for that has a lot to do with the lack of economic growth on the one side, and then the private industry of electricity – the people providing for themselves one way or another.

“As an institution, Eskom is going to be in trouble in the future, and it won’t be able to deliver more and more free services,” Duvenage told The Citizen.

Executive Director at the Centre for Risk Analysis, Chris Hattingh, said that multiple factors had to swing in the government’s favour for an increase in the FBE to be successful.

He listed administrative capacity, the successful elimination of cross-subsidisation, and the future expectations of those receiving the benefits as all being part of a “combustible” scenario.

“If the efficiency gains materialise, such as better indigent registers, reduced leakage, technology-driven metering, the increase is fiscally neutral by design.

“If they don’t, municipalities face a straight revenue shortfall on top of already-fragile finances, and given the track record of municipal billing systems and indigent register accuracy in South Africa, that’s a real risk,”

“An open-ended commitment to expanded free electricity, contingent on savings that haven’t yet been demonstrated at scale, inverts the normal sequencing of fiscally responsible policy design,” Hattingh told The Citizen.

Voters ‘disillusioned’

While Ramakgopa and the ANC’s posturing was written off as pure electioneering, Duvenage warned it could be too little, too late.

He stated that while the party could count on rural Eastern Cape, Limpopo and the North West, its urban support would continue its steady decline.

“Years passed, and the promises ended up in nothing in the majority of cases; people became disillusioned with this process.

“I think it is now touching the lower-middle class. There are alternatives, leaving the position of the ANC, generally speaking, very difficult. These types of promises will only have a very limited impact on certain areas,” said Duvenage.

Externally, Hattingh said investors could view the FBE threshold increase as “populist and fiscally loose”, but highlighted that the “fiscally contained” framing of the plan required it to be judged on execution.

“A credible, funded, means-tested safety net alongside genuine tariff reform is investment-neutral to positive.

“An unfunded expansion that quietly becomes a fiscal liability because the efficiency assumptions don’t hold, is the negative scenario, and it’s one South Africa has a track record of sliding into with well-intentioned subsidy schemes,” Hattingh concluded.