Eskom yesterday announced that it was aiming at an after-tax profit of R10 billion for the financial year ending March 2025 after suffering a loss of R55bn in the financial year ended March 2024.
The State-owned power utility loss after tax of R55bn occurred mainly due to the derecognition of a deferred tax asset of R36.6bn triggered by the separation of the National Transmission Company South Africa on 31 March 2024.
Eskom chief financial officer, Calib Cassim, deemed it unlikely that the remaining business would generate sufficient taxable income within the next five years to fully utilise Eskom’s unused assessed tax losses.
“It is encouraging that we recorded a lower loss before tax despite the momentous operational challenges we faced. I believe that we have reached a turning point and that the 2024 financial year will be remembered as the year in which we laid the foundation for future success,” Cassim said.
The derecognition has no impact on Eskom’s right to utilise assessed tax losses against future taxable income. The R55bn loss had its counterparts in a R22bn loss due to load shedding and a R23bn loss due to electricity theft.
Eskom has had no load shedding since 26 March 2024, so it has already improved its power sales by 4% year-on-year in the first six months of its financial year. The capacity lost due to unplanned outages has fallen from 18GW in May 2023, which was the worst month of load shedding, to only 10.6GW in November 2024.
Eskom aims to realise efficiencies of R21.5bn in the current financial year.
It said this will be achieved by encouraging sales growth and boosting cross-border sales. In October, exports surged by 34.4%, while imports dropped by 16.0%.
In addition to promoting revenue growth, there will also be a focus on reducing costs. This will include reducing the cost of producing electricity by optimising plant performance and reducing the usage of expensive diesel-fuelled Open Cycle Gas Turbines (OCGT).
In the past financial year, the average cost of using Eskom owned OCGT was R6 579 per megawatt-hour (MWh) whereas nuclear only cost R113/MWh, coal R541/MWh, imports R883/MWh and renewable Independent Power Producers R2 029/MWh.
Eskom’s average sales price is R1 654/MWh.
This is one of the reasons why coal-fired power still constitutes 80% of the power mix. Wind provides 6%, solar only 3%, hydro 4%, nuclear 4% and diesel 2%.
Eskom will also obtain savings through procurement and demand management and by rooting out corruption. This anti-corruption drive has already resulted in 304 arrests and 17 convictions, while 79 suppliers have incurred sanctions or suspended sanctions.
Eskom chairman Mteto Nyati said the delay in the results presentation was due to investigations into legacy management control issues.
He said operational challenges and the lack of adherence to internal controls urgently needed to be addressed to ensure that Eskom can return to a normal audit cycle, which allows for sufficient time to address audit findings.
“Today’s challenging results demonstrate the extremely tough choices we had to take, for which we are experiencing the benefits of today. We have continued to deliver progress and consistency in the diagnostic from two years ago to address the crisis that the current Eskom Board inherited when they took office in October 2022,” Nyati said.
“Many of the actions we are working on require policy changes, so we cannot do this without the government and in particular the ministries with oversight over Eskom’s operations who have been very supportive on this journey.”
Nyati also rubbished social media posts that said that load shedding would return in January 2025 as Eskom had sufficient capacity to prevent load shedding.
In addition, a further 2 524MW capacity would be added in the first quarter 2025 consisting of 930MW from Koeberg unit 2 in January, 800MW from Kusile unit 6 in February and 794MW from Medupi unit 4 in March.
The existential threat to Eskom, however, was the rise in municipal debt from R58.5bn at the end of March 2023 to R74.4 billion in March 2024 and R95.4bn in November 2024.
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