Eskom has reported a sharp improvement in its financial and operational performance, posting a net profit of R30.3-billion for the year ended March 31, more than double the R14-billion recorded a year earlier, as improved power station reliability, higher electricity tariffs, and lower financing costs boosted the utility’s bottom line.
The state-owned utility said earnings before interest, tax, depreciation, and amortisation (EBITDA) climbed to R108.6-billion, up from R98-billion in the previous year, while profit before tax rose to R39.4 billion from R21.9 billion. Revenue increased to R354.7-billion, supported largely by a 12.74% tariff increase approved by the National Energy Regulator of South Africa (NERSA).
The improved financial results come amid stronger generation performance, with Eskom’s Energy Availability Factor (EAF) improving to 65.16% from 60.6% in the previous financial year, helping reduce reliance on costly diesel-powered generation and improve system stability.
Operational gains
Eskom said network and generation performance improved significantly due to targeted maintenance programmes and better planning. The utility achieved 71% of its shareholder compact key performance indicators, up from 62% in the previous year.
The utility also reported fewer major interruption incidents and improved transmission reliability, although some performance targets remained unmet, including emissions compliance and transmission expansion projects.
Despite the gains, Eskom fell short of its target EAF of 70%, citing ongoing equipment failures and high levels of unplanned outages at several coal-fired power stations.
Municipal debt crisis worsens
One of Eskom’s biggest concerns remains unpaid municipal electricity accounts.
Total municipal arrear debt increased by R17 billion, or 17.9%, to R111.6 billion at year-end, up from R94.6 billion the previous year. Eskom warned that the continued growth in municipal debt poses a serious threat to its long-term financial sustainability.
READ: Five Western Cape municipalities struggle with Eskom debt
The utility said it continues to intensify debt collection efforts through payment arrangements, distribution agency agreements and legal measures against defaulting municipalities.
Electricity sales decline
Although revenue improved, electricity sales volumes declined to 178 terawatt-hours, down from 189.7 terawatt-hours a year earlier. Eskom attributed the decline to weaker demand from mining and industrial customers, smelter curtailments, mine shaft closures and growing adoption of rooftop solar installations.
To stimulate demand, Eskom is expanding wheeling opportunities and positioning itself to benefit from future electricity demand from data centres and large industrial customers.
Debt relief boosts liquidity
Government support through Eskom’s debt relief programme continued to strengthen the utility’s balance sheet.
Cash and cash equivalents almost doubled to R124.9-billion from R63.8-billion, while net debt declined to R313.3-billion from R358.7-billion.
The utility received R80-billion in government debt relief support during the year, which was later approved for conversion into equity by the Minister of Finance.
Credit rating agencies also responded positively, with Eskom reporting improved outlooks and ratings from several international agencies.
Going concern warning remains
Despite the turnaround, auditors and Eskom’s board cautioned that significant uncertainties remain.
The utility warned that long-term sustainability continues to be threatened by municipal debt, high borrowing costs, declining sales volumes, environmental compliance obligations and uncertainty around future electricity market reforms.
Auditors highlighted these concerns but agreed that Eskom could continue operating as a going concern because of existing mitigation measures and government support.
Qualified audit opinion persists
Eskom’s financial statements again received a qualified audit opinion, with auditors citing weaknesses in the recording of irregular expenditure and shortcomings in internal control systems.
Auditors reported R4.9-billion in irregular expenditure for the year, although this was significantly lower than the previous year’s R10.9-billion.
At the same time, Eskom continued to battle non-technical electricity losses linked to theft, illegal connections and prepaid electricity fraud, with estimated losses amounting to R6.6-billion during the year.
Reform process gains momentum
The utility said restructuring of the electricity sector advanced during the year, with the presidency endorsing Phase 1 recommendations for the establishment of an independent transmission system operator.
Eskom stressed that reforms must protect its financial sustainability and maintain lender confidence while ensuring energy security.
ALSO READ: NUM rejects Ramaphosa’s plan to split Eskom transmission, warns of job losses
- Eskom reported a net profit of R30.3 billion for the year ended March 31, more than doubling the R14 billion from the previous year.
- Revenue increased to R354.7 billion, supported by a 12.74% electricity tariff increase approved by NERSA.
- Eskom’s Energy Availability Factor improved to 65.16% from 60.6%, despite missing its target of 70% due to ongoing equipment failures and outages.
- Total municipal arrear debt rose by R17 billion to R111.6 billion, posing a serious threat to Eskom's financial sustainability.
- Eskom received R80 billion in government debt relief, boosting cash reserves to R124.9 billion and reducing net debt to R313.3 billion.
Eskom has reported a sharp improvement in its financial and operational performance, posting a net profit of R30.3-billion for the year ended March 31, more than double the R14-billion recorded a year earlier, as improved power station reliability, higher electricity tariffs, and lower financing costs boosted the utility's bottom line.
Eskom said network and generation performance improved significantly due to targeted maintenance programmes and better planning.
Despite the gains, Eskom fell short of its target EAF of 70%, citing ongoing equipment failures and high levels of unplanned outages at several coal-fired power stations.
One of Eskom’s biggest concerns remains unpaid municipal electricity accounts.
Total municipal arrear debt increased by R17 billion, or 17.9%, to R111.6 billion at year-end, up from R94.6 billion the previous year. Eskom warned that the continued growth in municipal debt poses a serious threat to its long-term financial sustainability.
READ: Five Western Cape municipalities struggle with Eskom debt
To stimulate demand, Eskom is expanding wheeling opportunities and positioning itself to benefit from future electricity demand from data centres and large industrial customers.
Government support through Eskom’s debt relief programme continued to strengthen the utility’s balance sheet.
Credit rating agencies also responded positively, with Eskom reporting improved outlooks and ratings from several international agencies.
Despite the turnaround, auditors and Eskom’s board cautioned that significant uncertainties remain.
Auditors highlighted these concerns but agreed that Eskom could continue operating as a going concern because of existing mitigation measures and government support.
Eskom’s financial statements again received a qualified audit opinion, with auditors citing weaknesses in the recording of irregular expenditure and shortcomings in internal control systems.
Auditors reported R4.9-billion in irregular expenditure for the year, although this was significantly lower than the previous year's R10.9-billion.
At the same time, Eskom continued to battle non-technical electricity losses linked to theft, illegal connections and prepaid electricity fraud, with estimated losses amounting to R6.6-billion during the year.
Eskom stressed that reforms must protect its financial sustainability and maintain lender confidence while ensuring energy security.
ALSO READ: NUM rejects Ramaphosa's plan to split Eskom transmission, warns of job losses
