Eskom Projects Strong Financial Recovery After First Profit in Eight Years

Eskom, South Africa’s state-owned power utility, is projecting steady financial recovery after reporting its first full-year profit in eight years. Pre-tax profits are expected to rise from 25.8 billion rand this year to 35.4 billion rand over the next two years, supported by operational improvements and government debt relief. While power outages have decreased dramatically, municipal arrear debt remains a key risk. Eskom plans up to 343 billion rand in capital expenditure over the next five years, with potential public-private partnerships to support growth.

South Africa’s state-owned power utility, Eskom, is projecting a sustained improvement in its financial performance over the coming years, following a significant milestone of reporting its first full-year profit in eight years. In the most recent financial year, Eskom recorded a pre-tax profit of 25.8 billion rand ($1.5 billion), representing an increase of approximately 8% compared with the previous year. The company’s financial year ends in March, and its recent figures mark a notable turnaround from years of losses and operational challenges.
In a presentation to a parliamentary committee, Eskom outlined its expectations for continued growth, forecasting pre-tax profits of 30.1 billion rand for the next financial year and 35.4 billion rand in the subsequent year. The company said these projections are supported by ongoing operational improvements across its fleet of power stations, as well as continued government debt relief measures that ease financial pressures. Eskom emphasized that efficiency upgrades, maintenance programs, and investment in modernizing its facilities are key drivers of the improved outlook.
Eskom remains South Africa’s primary electricity supplier, generating most of its power from coal-fired plants. In addition to its coal fleet, it operates a nuclear power plant and smaller facilities that use diesel or harness hydroelectric power. The utility has made significant strides in reducing the frequency and duration of power outages, which had historically plagued the country. This month, Eskom reported achieving 300 consecutive days without load-shedding, a sharp improvement from 13 days of outages last financial year and a record 329 days of power cuts two years ago. These improvements in service reliability have been a key focus for the company, helping to restore public confidence and stabilize energy supply.
Despite these positive developments, Eskom continues to face significant financial risks, particularly from municipal arrear debts. The total owed by municipalities has risen to 110.5 billion rand and is projected to increase further, posing a challenge to the company’s cash flow and operational stability.
To support its operations and future growth, Eskom has outlined plans for up to 343 billion rand in internally funded capital expenditure over the next five years. This investment is aimed at enhancing power generation capacity, upgrading infrastructure, and implementing technological improvements. The company also indicated the potential to explore public-private partnerships to supplement this spending, enabling additional investment without overburdening its balance sheet. Overall, Eskom’s outlook suggests a period of financial recovery and operational stabilization, underpinned by strategic investments, government support, and improvements in service reliability.