Eskom to become profitable again: What changed now?

Previous Financial Year

In the 2024 fiscal year, Eskom experienced a net loss before tax of R25.5 billion, which is an improvement of R9.1 billion compared to the previous fiscal year. The EBITDA rose to R43.4 billion, marking an increase of R8.8 billion from the prior year. Consequently, Eskom faced an increase in loadshedding days, reaching 329 days, and diesel usage rose to R33.9 billion, which is R4.3 billion more than the previous year. Additionally, Eskom saw a 3% year-over-year decrease in sales volumes and projected a revenue loss of R23 billion due to the electricity theft.

Current Financial Year

In the first half of the 2025 fiscal year, Eskom saw a 4% increase in sales volumes compared to the previous year and achieved a significant reduction in diesel costs by R11.9 billion. Remarkably, this period marks the first time in a while that Eskom operated for six months without any loadshedding, which is encouraging for the state-owned energy company. Furthermore, Eskom projected a profit of R10 billion by the end of the current financial year (1 April 2024 - 31 March 2025), representing their first profit in eight years, as they recover from a reported losses for the 2024 financial year (1 April 2023 - 31 March 2024). Additionally, the net loss after tax amounted to R55 billion due to the derecognition of a deferred tax asset following the NTCSA's separation from Eskom.

In simple terms, Eskom reported having more expenses than revenue.

Biggest challenge

Eskom's municipal debt is one of its most significant financial challenges. The amount owed to Eskom rose by R15.9 billion from the previous fiscal year, reaching R74.4 billion. Eskom also anticipates that this will increase to R110 billion by the end of the 2025 fiscal year.

Plan to achieve profitability

• Cost reduction.

• Long-term sustainability.

• Dealing with electricity theft, which resulted in a revenue loss of approximately R30 billion/year.

• Dealing with municipal debt.

• Modernising the grid.

• Incorporation of cleaner technologies.

• Reduction of emissions.

• Increasing tariffs.

• Improving its production capacity.

• Dealing with governance issues, including corruption.

Author's opinion

Despite the numerous challenges currently confronting Eskom, there appears to be a potentially promising future ahead. According to their reports, the newly appointed executive team is intensely addressing the systematic operational and financial challenges to devise effective solutions. The notable reduction in load shedding days and decreased diesel usage in the 2025 fiscal year suggest that Eskom's projections are realistic rather than overly ambitious. Additionally, Eskom has intensified efforts against electricity theft, a significant issue, by requiring prepaid electricity consumers to recode their meter boxes. This measure aims to ensure operational meters and prevent usage by those purchasing from unauthorized suppliers. Furthermore, a forensic investigation has been launched to address alleged collusion between Eskom staff and illicit operators selling fraudulent electricity tokens. Eskom remains dedicated to implementing the Generating Recovery Plan, which supports energy security and sustainability. As a result, I am confident that Eskom will continue as a going concern in the coming years.

Disclaimer: This conclusion is solely based on my opinion and does not constitute a factual statement.

Thank you for reading. See you next week Thursday.