Eswatini Electricity Losses of US$15 Million Worry IMF
ESWATINI · ENERGY
Key Facts
- —The country Eswatini, formerly Swaziland, is a small landlocked kingdom between South Africa and Mozambique, ruled by King Mswati III since 1986.
- —What happened A new IMF review, released on Tuesday 6 October according to the Times of Eswatini, warns that the state power utility’s losses could fall on taxpayers.
- —The numbers The utility posted an operating loss of about E250 million (about US$15 million) in 2024/25, after years of profits.
- —Why it happened Drought cut hydropower and big customers began making their own power; a pricier Eskom import contract from 2025/26 added costs.
- —The prices The regulator approved a 13.61% rise for 2026/27; part of a E100 million (about US$6 million) state subsidy trimmed it to 11.74%.
- —What it means for US readers A bailout would add to fast-rising public debt in an economy tied to the IMF, US trade preferences and US health aid.
- —Still open How large a rescue could become, and when the government might have to act, is not yet clear.
The International Monetary Fund (IMF) warns that the state-owned Eswatini Electricity Company could become a burden on taxpayers in the small southern African kingdom. For American investors and donors, it is a debt warning from an economy with close US trade and health-aid ties.
The warning sits in a Selected Issues report, a set of background studies that accompanies the IMF’s 2026 review of Eswatini. The Times of Eswatini, a daily in the capital Mbabane, reported on Wednesday 7 October that the review was released a day earlier.
How a Profitable Utility Slid Into Losses
The Eswatini Electricity Company (EEC) is the state-owned firm responsible for generating, transmitting, buying and distributing the country’s electricity. It imports close to 80% of its power from Eskom, South Africa’s state utility, and Electricidade de Moçambique, Mozambique’s state utility.
The rest is produced at home, about half of it by hydropower. After more than a decade of profits, the company’s operating result slipped below zero, IMF figures show.
The slide deepened in 2024/25, when EEC recorded an operating loss of about E250 million (about US$15 million). The lilangeni, pegged one-to-one to the South African rand, traded at about 16.5 emalangeni to the US dollar on 7 October 2026.
The IMF blames drought, which cut hydropower output, and weaker sales as some large customers switched to generating their own electricity. In 2025/26, an expired long-term supply contract with Eskom was replaced by a new one at higher prices.
A Tariff Rise That Came a Year Late
In November 2024, EEC asked for an average tariff increase of about 25% for 2025/26. The Eswatini Energy Regulatory Authority (ESERA), the statutory body that approves electricity prices, granted a smaller two-step rise instead.
Its 2025 decision allowed 14.67% in 2025/26 and 10.91% in 2026/27. The government then delayed the first step by a year to shield households and businesses from higher living costs, the IMF says.
A new EEC application, driven by pricier imports under renegotiated supply contracts, won a 13.61% rise for 2026/27, announced on 10 February 2026. The government then pledged E100 million (about US$6 million) for 2026 and the same again for 2027.
Using 60% of the 2026 money, ESERA cut the average rise to 11.74% from 1 April 2026. That still left the Eswatini Electricity Company carrying part of the gap between its costs and its prices, according to the IMF.
The IMF calls such arrangements quasi-fiscal activities, meaning a state company carries out a government policy without being fully paid for it. Below-cost tariffs protect consumers, but the utility absorbs the difference.
How the Bill Could Reach Taxpayers
The IMF says the damage is already visible. Cash shortages have delayed capital projects, deferred maintenance and forced EEC to borrow to pay wages.
Some suppliers have stopped giving the Eswatini Electricity Company credit and now demand payment on delivery. Without corrective action, the IMF warns, the financing gap could require public support and spill over into government finances.
That support could come as subsidies, transfers, guarantees on the utility’s loans or a direct injection of capital. Any of these would compete with wages, interest payments and capital projects for the same public money.
The government itself has limited room to absorb such a shock, the IMF says. Its staff said in August that public debt rose from 40% of GDP in March 2025 to 44.7% in March 2026.
The IMF team expects public debt to reach 50% of GDP by March 2027. Eswatini’s fiscal year runs from April to March.
Revenue from the Southern African Customs Union (SACU), a customs pool Eswatini shares with South Africa, Botswana, Lesotho and Namibia, remains volatile. The IMF also projects an effective interest rate on government debt of 8.7% in 2026, above nominal growth of 6.8%, the Times of Eswatini reported.
Who Decides in Eswatini
Eswatini is Africa’s last absolute monarchy, where King Mswati III appoints the prime minister and political parties cannot contest elections. Any rescue of the utility therefore rests with a government answerable to the king, while ESERA sets the tariffs.
The IMF team that reviewed the economy this year was led by Xiangming Li and held talks in Eswatini from 23 July to 5 August. Its broader advice was to strengthen the financial discipline of public enterprises while safeguarding services.
What It Means for US Readers
The United States is the IMF’s largest shareholder, so the Fund’s warnings shape how Washington and Western lenders read Eswatini’s finances. A utility bailout would add to public debt that is already heading toward 50% of GDP.
Eswatini’s clothing factories have long exported to the US under the African Growth and Opportunity Act (AGOA), a US trade preference law. Higher power prices raise costs for them and for other exporters, including the sugar industry.
Eswatini also has one of the world’s highest HIV rates. US health aid through PEPFAR, the President’s Emergency Plan for AIDS Relief, has long funded treatment there.
Clinics and laboratories in the kingdom depend on steady, affordable power from the Eswatini Electricity Company.
Eswatini has a plan to cut its power imports, but new power plants take years to build. Until then, much of the kingdom’s power bill depends on prices set by Eskom across the border.
What Is Not Known
It is not known how large a rescue of the Eswatini Electricity Company could become, or when the government might have to act. It is also unclear whether the E100 million (about US$6 million) a year already pledged for 2026 and 2027 will be enough.
How the Ministry of Natural Resources and Energy, which oversees the power sector, will respond to the IMF’s warning is not yet clear. Rainfall matters too, because a better wet season would lift hydropower output and ease the company’s import bill.
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Frequently Asked Questions
What is the Eswatini Electricity Company?
It is the state-owned utility that generates, transmits, buys and distributes electricity in Eswatini. It imports close to 80% of the country’s power from South Africa and Mozambique.
Why is the IMF worried about it?
After years of profits, the Eswatini Electricity Company posted an operating loss of about E250 million (about US$15 million) in 2024/25. The IMF says the gap may eventually need public money.
How much have electricity prices gone up?
Average tariffs rose 11.74% from 1 April 2026, after a government subsidy trimmed an approved 13.61%. Domestic customers pay 15.09% more, while the lifeline tariff for the smallest users rose 6%.
Who runs Eswatini?
King Mswati III has ruled since 1986 as Africa’s last absolute monarch. He appoints the prime minister, and political parties cannot contest elections.
Does this affect Americans?
Indirectly. The US is the IMF’s largest shareholder, and US trade preferences and health aid tie America to Eswatini’s economy and its public finances.
Sources: Times of Eswatini, “EEC could become burden to taxpayers – IMF”, 7 October 2026; Times of Eswatini, “IMF warns borrowing costs worsen debt dynamics”, 7 October 2026; IMF, Press Release No. 26/273, staff completes 2026 Article IV mission to Eswatini, 5 August 2026; Eswatini Energy Regulatory Authority, public notice “Government Intervention on the Electricity Tariff for Financial Year 2026/27”, 2026; Eswatini Energy Regulatory Authority, decision on EEC’s 2025/26 and 2026/27 tariff review application, March 2025.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error · Editorial responsibility: Matthias Camenzind, Editor-in-Chief