Invitation to comment - Eskom application for a two-year negotiated pricing agreement for Manganese Metal Company (Pty) Ltd in Mpumalanga Province 15 June 2026

The National Energy Regulator of South Africa (NERSA) has invited public comment on an application by Eskom for a two-year negotiated pricing agreement (NPA) for Manganese Metal Company (Pty) Ltd (MMC) in Mpumalanga Province. This development underscores NERSA's ongoing role in balancing the sustainability of energy-intensive industries with the broader public interest and electricity system stability. NPAs, which allow for deviations from standard tariffs, are a critical mechanism under the Electricity Regulation Act, 2006, aimed at supporting strategic sectors, preserving jobs, and optimising Eskom's system utilisation. The invitation to comment signals a transparent regulatory process, inviting stakeholders to contribute to a decision that will have implications for industrial policy, energy pricing, and economic development in South Africa.

The National Energy Regulator of South Africa (NERSA) recently issued an invitation for public comment regarding an application by Eskom SoC Ltd (Eskom) for a two-year negotiated pricing agreement (NPA) on behalf of Manganese Metal Company (Pty) Ltd (MMC). This application, received by NERSA on 28 May 2026, pertains to MMC's high-grade selenium-free electrolytic manganese metal (EMM) production facility located in Mpumalanga Province. The call for public input, with a closing date of 15 July 2026, highlights the regulatory body's commitment to transparency and stakeholder engagement in decisions impacting the national electricity supply industry and key economic sectors.

Negotiated pricing agreements are a vital, albeit often contentious, instrument in South Africa's energy landscape, designed to provide bespoke electricity tariffs to large industrial users. These agreements aim to support the competitiveness and sustainability of energy-intensive industries, which are crucial for job creation, export earnings, and overall economic stability. The current application for MMC follows recent approvals of similar concessionary pricing arrangements for other ferrochrome and manganese ferroalloy producers, indicating a broader trend of regulatory intervention to safeguard strategic industrial capacity amidst challenging economic conditions and rising electricity costs.

This article will delve into the legal and regulatory framework governing NPAs in South Africa, examine the rationale behind such agreements, and analyse the implications of NERSA's consideration of Eskom's application for MMC. It will also consider the broader context of industrial policy and the balancing act NERSA must perform between supporting specific industries and ensuring a fair and stable electricity pricing regime for all consumers.

NERSA, established under the National Energy Regulator Act, 2004 (Act No. 40 of 2004), is mandated to regulate the electricity, piped-gas, and petroleum pipeline industries in South Africa. Its authority over the electricity sector is primarily derived from the Electricity Regulation Act, 2006 (Act No. 4 of 2006). A core function of NERSA is to regulate tariffs and prices, and section 15(3) of the Electricity Regulation Act explicitly permits the Regulator, in prescribed circumstances, to approve a deviation from set or approved tariffs.

The concept of Negotiated Pricing Agreements (NPAs) is rooted in the Electricity Pricing Policy (EPP) of the Department of Energy (now the Department of Electricity and Energy, DEE). The EPP authorises NERSA to approve price agreements that may deviate from standard tariff levels, structures, service fees, network standards, and capital contributions. To ensure a transparent and equitable process, the DEE developed a framework for NPA applications and approvals, which outlines the criteria against which NERSA evaluates, approves, and monitors these agreements, requiring consultation with key stakeholders, including National Treasury. The Interim Framework for Long-Term Negotiated Pricing Agreements, approved in September 2020, further provides the principles and criteria for evaluating NPA-related applications.

The primary purpose of NPAs is to facilitate incentive pricing for qualifying consumers to sustain or increase their electricity usage, thereby supporting economic activity and job creation. For energy-intensive industries, such as those in the ferrochrome and manganese sectors, electricity costs represent a significant portion of their operating expenses. High and escalating electricity tariffs can severely impact their global competitiveness, leading to production curtailments, job losses, and even business failures. NPAs are thus seen as a mechanism to mitigate these risks, retain strategic industrial demand, and improve the overall utilisation of Eskom's generation capacity, contributing to system and financial stability.

The application by Eskom for a two-year NPA for Manganese Metal Company (Pty) Ltd (MMC) must be assessed within the established regulatory framework and against the backdrop of recent NERSA decisions concerning similar energy-intensive industries. MMC is a globally significant producer of high-grade selenium-free electrolytic manganese metal (EMM), with its plant in Mpumalanga being the world's only non-China based producer and the largest refiner of this material. Its products are crucial for various industries, including lithium-ion battery manufacturing, alloying, and welding, with approximately 95% of its annual production exported. Given its energy-intensive operations, the cost of electricity is a critical factor in MMC's operational viability and global competitiveness.

NERSA's evaluation process for NPAs is comprehensive, involving an assessment of the applicant's corporate and market information, including global ownership structure, international and local competitiveness, market conditions, and the sustainability of the sector. Crucially, the impact of the NPA on the licensee's overall revenue (and by extension, standard customer tariffs) and the financial hardship of the customer are key considerations. The Electricity Regulation Act, 2006, while allowing for deviations, also stipulates that licence conditions relating to tariffs must avoid undue discrimination between customer categories and enable an efficient licensee to recover its full costs. However, it also permits the cross-subsidy of tariffs to certain classes of customers.

Recent NERSA approvals provide important precedents. In May 2026, NERSA approved an amended NPA framework, including interim concessionary pricing arrangements, for several ferrochrome smelters, such as Samancor Chrome and the Glencore-Merafe Chrome Venture. These approvals were explicitly aimed at supporting industrial sustainability, preserving employment, and maintaining long-term economic value in South Africa's energy-intensive sectors. Furthermore, NERSA approved a temporary six-month relaxation of the 'take-or-pay' (TOP) terms for Transalloys (Pty) Ltd, another manganese ferroalloys smelter in Mpumalanga, to mitigate projected job losses and prevent plant closure. A significant aspect of these recent approvals is Eskom's assurance that the revenue variance associated with the concessionary tariffs is ring-fenced and will not be recovered through future tariff mechanisms or Regulatory Clearing Account processes, thus not imposing additional costs on standard tariff customers or taxpayers.

The public consultation process for MMC's application, as outlined by NERSA, requires stakeholders to submit written comments, which will then be assessed and may lead to public hearings. This aligns with the Promotion of Administrative Justice Act, 2000, and section 10(1)(d) of the National Energy Regulator Act, which mandate affording affected and interested parties a reasonable opportunity to participate in decision-making. The indicative timeline for NERSA to decide on such an application is 120 days, as per section 14(1) of the Electricity Regulation Act, 2006. Practitioners will need to scrutinise the application's alignment with the DEE's Amended Framework for Short Term NPAs, particularly regarding the criteria for eligibility, the proposed pricing mechanism, and the justification for the two-year duration.

The invitation for comment on Eskom's application for a two-year negotiated pricing agreement for Manganese Metal Company (Pty) Ltd represents a critical juncture for both the company and the broader South African industrial policy. For legal practitioners, this process highlights the intricate balance NERSA must strike between promoting industrial competitiveness, safeguarding employment, and ensuring the financial health of Eskom, all while upholding principles of non-discrimination and transparency in electricity pricing. The recent approvals for other ferrochrome and manganese producers set a precedent, suggesting NERSA's willingness to use NPAs as a strategic tool to support vital sectors of the economy, provided the financial impact on other consumers is mitigated.

Attorneys advising clients in energy-intensive industries should closely monitor NERSA's decision on the MMC application, as it will further clarify the Regulator's stance on concessionary tariffs and the criteria for their approval. Furthermore, practitioners involved in public law and administrative justice should consider participating in the comment period, ensuring that all relevant perspectives are brought before NERSA. The outcome will not only determine the future electricity costs for MMC but also provide valuable insights into the evolving regulatory approach to industrial electricity pricing in South Africa, particularly as the country navigates energy transition and economic recovery.