Subsidy Framework

This is a support scheme developed by the Authority for the benefit of the Electricity Supply Industry of Eswatini and intends to protect needy households and enhance electricity access at affordable tariffs, which is especially necessary as the industry starts a period of price adjustments to reduce the prevailing cross-subsidies among the various electricity customer categories. This scheme is to be accommodated while ensuring that the average tariff remains at the cost reflective level for the utility as a whole.

Why The Subsidy Framework ?

In 2008, 2013, as well as in 2015, The Southern African Development Community (SADC) Energy Ministers pronounced that tariffs in the region should be cost-reflective by the year 2019. In line with these pronouncements, the Authority and the Utility conducted several studies on the cost of supplying electricity in Eswatini. The latest Cost of Supply study, done in 2018, revealed that the then average domestic tariff was around 41% below the long run marginal cost of supply. Additionally, it revealed that the then tariff structure did not reflect the marginal cost of supply for almost all of the customer categories.

Being alert to the challenges associated with cross-subsidization and in line with Eswatini’s commitments to SADC, the Ministry of Mineral Resources and Energy, through ESERA, initiated to remove cross subsidies among customer categories and bring the electricity tariffs to cost reflective price levels for the different categories of consumers. ESERA, having completed and submitted a Subsidy Framework for Cabinet approval, aimed at protecting Eswatini’s vulnerable population against steep electricity increments that are necessary to achieve cost reflectivity, has implemented a migration plan effective April 2020, along the 2020/21, 2021/22 tariff award. This scheme is to be accommodated while ensuring that the average tariff remains at the cost reflective level for the utility as a whole.

What Will The Subsidy Framework Do ?

The main objective of the Subsidy Framework is to shield customers who cannot cope with cost reflective tariffs high electricity costs, as tariffs migrate towards cost reflectivity. It is designed to remove cross subsidies among customer categories, in order to bring the Eswatini Electricity Supply Industry to cost reflective levels for the different categories of consumers, to send correct signals to consumers in terms of their consumption levels and behavior and to develop a subsidy scheme for poor households to protect them from tariff increases and to enhance electricity access at affordable rates.

This framework ensures to cater and cushion all domestic customers. It introduces a new tariff category called the life line tariff. It is designed to cushion and provide a discount to vulnerable groups including the elderly, orphaned and vulnerable children and qualifying low-income customers.

Lifeline tariff design

A Lifeline program provides a discount on essential services to qualifying low-income consumers to ensure that all Swazi households have the opportunities and security that utility services bring. Lifeline is part of the Universal Access Initiative pursued through the Rural Electrification Programme. The Lifeline program is available to eligible low-income consumers.

The lifeline tariff is designed to be an increasing block tariff with three blocks. Increasing block tariff (IBT) means that the applicable rate differs according to level of consumption. For the Lifeline Category, the three blocks are explained below:

The first block will be a subsidised energy charge in E per kWh for consumption levels up to 75 kWh per month.
The second block will be a cost reflective energy charge and it will apply to every unit consumed in excess of 75 kWh per month and up to 100kWh per month.
The third block will apply to every unit consumed in excess of 100 kWh per month. The third block has been added as a control mechanism to discourage spurious applications for the lifeline tariff category. It will be a very high tariff that will set the average tariff for the lifeline category higher than the domestic tariff for levels of consumption higher than 100kWh per month. The tariff for this block shall be calculated from time to time to breakeven with the domestic category.

Lifeline Tariff

Type	NON TOU TARRIFS	Energy Change E/KWh (2023/24)	Energy Change E/KWh (2024/25)
S10	Lifeline (0-75 KWh)	E1.2578	E1.3959
	Lifeline (76-100 KWh)	E2.0964	E2.3266
	Lifeline ( > 100 KWh)	E4.6121	E5.1185

Rationale for the subsidized block

The 75kWh per month that will be subsidised are considered adequate to cover the basic needs of poor households (i.e., lighting, sporadic ironing, sporadic operation of TV/radio/laptop, hot plate, operation of a small fridge). The volume of consumption that will be subsidised targets the consumption of basic electricity needs (as they were described above) and does not cover electricity volumes for heating and cooling.

ELIGIBILITY AND APPLICATION

Eligibility for Beneficiaries

The Guideline is targeting consumers that cannot afford to pay the actual cost of electricity supply (i.e., poor households), specific eligibility criteria should apply. These should focus on identifying who is in actual need of the subsidy. Unfortunately, Swaziland does not have social programmes which already identify poor and vulnerable households. Therefore, a technical mechanism has been developed, for initial screening, to target needy consumers.

The suggested mechanism is the maximum expected level of consumption for poor households who are efficient in the use of electricity. Customers who exceed within a tariff year an average amount higher than 100kWh per month will fall in the third block which has a higher tariff and hence will involuntarily resort to efficiency or apply for reclassification to Domestic Category.

At the end of each tariff year, the Licensee shall evaluate the eligibility of those in the Lifeline based on the monitoring and evaluation procedures set in subsidy framework. Any customers who no longer meets the criteria for Lifeline category shall be transferred to the domestic category.

Prepaid meters will be a prerequisite for all customers who wish to apply for the lifeline tariff.

The following social groups may qualify as beneficiaries of the tariff support:

Child- headed households (orphans)
Aged people households
Physically challenged people households
Vulnerable/ impoverished households

Application Process/ Screening

Currently, residential customers constitute a huge proportion of customers connected to the grid. The Service Provider has historical data for the consumption of all of those customers and this data will also be considered in initial screening process. All customers who want to be in the Lifeline category shall follow the defined application process.

Life Line Inclining — Block Tariff (IBT) Structure

This is a new type of tariff which has been included in the structure to cater for domestic customers. The life line tariff is designed to cushion and provide a discount to vulnerable groups including the elderly, orphaned and vulnerable children and qualifying low-income customers. This type of tariff is an inclining block tariff (IBT) which means the applicable rates will differ according to the level of consumption. The IBT has 3 levels, all influenced by the amount of monthly consumption for that particular customer’s household. Customers will have to apply to be a part of this tariff structure where they will have to meet a set selection criterion to qualify. The selection criteria is based on the customer’s economic status and their level of monthly consumption. It is worth highlighting that during the public hearings conducted by the authority, this was a consistent area of concern raised by customers, and in addressing the issue, the life line tariff was designed.

Who Qualifies ?

For customers to be eligible, they must meet both the criteria set below:

Economic status (household income not above E3,500)
Average monthly consumption level (not above 75 kWh or 75 units)

The Application Process ?

A customer who meets the Lifeline qualification criteria, can apply for being in the Lifeline category. The customer shall fill an application form, available at any office of the Service Provider (EEC), office of the Regulator or website of the Service provider or Regulator.

The customer should then send this form, by physical means or by electronic means to the Service provider, together with proof that he/she is vulnerable. Such proof may be a proof of household income, certification by Community Authority or any statutory national body which has the power and authority to determine people’s socio-economic status.

In the event the customer’s current average consumption is above 150 kWh per month, the customer must make an undertaking to reduce his/ her consumption, so that it is in line with the defined Lifeline category. No qualifying customer shall be disadvantaged by past consumption pattern.

A customer classified as Lifeline customer shall, on an annual basis, update his/ her data file with the Service provider for monitoring and evaluation purposes. Failure to update information after three consecutive reminders, and three months after the set date has elapsed, shall lead to the customer disqualified from the Lifeline category and the customer shall from the date of disqualification be classified as domestic. The prevailing domestic tariff shall be prospectively applicable thereon.

The admission process shall be on continuous basis and on first come first save basis. The process shall continue so long as there is still a room for additional beneficiaries. Beneficiaries will be registered by the utility, who will also re-program their purchasing system to allow the customer to purchase according to their life-line category tariff. The steps for applying are as follows:

Get an application form from any EEC service center. If you’re unable to make way to the service center, you can get a form from your local umgcuguteli or community development officers.
Fill in the form and collect all requested supporting documents (specified in the form)
Submit the form at any EEC service center or your local umgcugcuteli/community development officer.
Await response from EEC through your registered contact details (registered in the application form).

Note: Whilst at its piloting stage, the subsidy rollout program will have a limited number of beneficiaries to be admitted.

Selecting Beneficiaries

The qualifying criteria (E3500 household income & 75kWh 12-months historical consumption) will be applied simultaneously by the utility for consideration. The utility shall use this as a first step in screening applications and any application that does not meet the criteria will be discarded.

Household income can be proved by one of the following means:
1. Salary advise/ Payslip accompanied by a valid letter of employment (in company letterheads or with company stamp)
2. An authorised form duly completed by a community authority (e.g. batfutfukisi, bagcugcuteli, bucopho etc), with a local authority stamp.
3. Any other proof which has the authentication of a statutory body incorporated in Eswatini (e.g. DPM’s office)

Note: If in the future, a customer is found to have misrepresented facts, legal proceedings shall be instituted against him/her. Based on the tariff level for a particular period, and based on the household consumption basket, there will be a set level of household monthly income to be considered during the application and selection process.

What happens to customers who don’t qualify for the Life-Line Program?

For customers who do not meet the set selection criteria to qualify for the life-line tariff, the same domestic tariff that has been in operation will apply to them. They will continue purchasing electricity at the set amount of E1.80 per kWh.

2020/21, 2021/22 Domestic – Lifeline Rates and Bill Comparison

Based on the tariff adjustment approval for 2020/21 and 2021/22, the tariffs for domestic and Life line categories, and their corresponding bills at various levels shall be as follows:

2021/22
		Applicable Tariff
Range	No. of Units	Domestic	Life - Line
0 - 75 kWh	75	1.80	1.08
76 - 100 kWh	25	1.80	1.88
100 <	25	1.80	3.96

		Cummulative Bill
Range	No. of Units	Domestic	Life - Line
0 - 75 kWh	75	135.00	81.00
76 - 100 kWh	100	180.00	126.00
100 <	125	225.00	225.00

Application Form

Application Process

Interested customers may apply to enter the life line category. Applications are made to the Utility (EEC) as per the following process:

Process Done By The Utility (EEC)

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