Eskom made a R17.83 billion profit in the six months to September 30, a very strong turnaround over the R55.02bn loss at the last year-end, due to better cash flows, higher tariffs and state debt relief, but liquidity remains a longer-term risk.
Profit before finance costs nearly doubled to R40.7bn, from R21.87bn at the end of the interim period last year, the utility, which this week celebrated more than 300 days without having to implement loadshedding, said in its interim results.
Further indication of a restoration of balance sheet health was the R33.01bn cash balance, double the R16.36bn held in cash at the same time last year, which the utility’s board said was mainly due to the debt relief support received, as well as the improvement in the cash from operations during the period.
The utility noted, as part of its going concern considerations, that liquidity in the longer term after the debt relief period was at risk because of financial sustainability challenges arising from an inadequate tariff path, high debt service costs, escalating municipal arrear debt, operational inefficiencies, the impact of fraud and corruption, the focus on addressing plant performance, and the sourcing of funding for the Transmission Development Plan.
In 2024, Eskom received R76bn in government debt relief, subsequently converted to equity, and R8bn in the first half of its 2025 year. There was a 12.74% electricity tariff increase from April last year
The remaining portion of the debt relief support came to R66bn in 2025 and R40bn in 2026, including the conditions the group needs to comply with to allow for the conversion of debt relief to equity, to address Eskom’s debt and interest payments, together with the takeover of R70bn of Eskom debt in 2026.
The debt relief support also included a R2bn reduction in debt support for 2025, because of the delay in selling Eskom Finance Company (EFC), the unit that provides home loans for houses for Eskom staff, which was sold in principle to African Bank in October, for R5.7bn.
Eskom is also not allowed to take out new borrowings - except for drawdowns from existing facilities - until the end of the debt relief period - unless approved by the Minister of Finance.
Existing government guarantees on borrowings before March 31, 2023, in terms of the R350bn government guarantee facility, remain in place until settlement of the guaranteed debt.
All Eskom’s other operational and capital expenditure spending has to be financed through operational cash flows and drawdowns from existing project-related loan agreements, the results showed.
Eskom said the failure by municipalities to pay outstanding debt remains a key risk in its future financial viability, as the municipal debt relief arrangement is “yielding minimal results with most of the municipalities failing to comply with the conditions.”
Regarding the proposed splitting up of Eskom into three units, Eskom said the NTCSA (National Transmission Company of South Africa) would be in a tax-paying position from 2025 onwards, based on the latest forecasts and paid provisional tax of R1.4bn as at September 30, 2024.
However, the corporatisation and operationalisation of the National Electricity Distribution Company South Africa (NEDCSA) was delayed due to external dependencies and the delayed operationalisation of NTCSA.
The results however splitted Eskom’s revenue into R106.48bn for generation, R57.45bn for transmission, and R19.81bn for distribution. In terms of taxed profit or losses, the generation unit reported a R4.31bn interim loss, transmission a R21.17bn taxed profit, while distribution reported a R857 000 interim taxed loss.
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