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Eskom Reports Loss of R5 Billion as Financial Troubles Deepen

Published September 21, 2023
8 months ago

In wide-scale revelations marking escalating financial distress, Eskom, the South African electricity public utility, reported a pre-tax loss of R5 billion in the first quarter of the 2023/24 financial year on 29 August, 2023. These figures, part of Eskom's unaudited quarterly results, were presented to the Standing Committee on Appropriations.

Despite the financial deficit, Eskom's net revenue showcased a marked improvement, surging from R66.3 billion to R70.9 billion for the same quarter driven largely by a significant 18.65% rise in electricity tariffs for direct customers since 1 April 2023.

However, sales volumes dropped by 6.2% to 3 TWh, falling short of expectations largely consequent to generation supply restrictions resulting in load curtailment and whisking in the spectre of load-shedding.

Venturing further into the financial health of Eskom, the primary energy costs were lowered by R3.5 billion, standing at R43.4 billion, owing to a 19.3% decrease in expenditure on Open Cycle Gas Turbines (OCGTs) and a favourable dip in diesel prices.

However, the more ominous part of the financial appraisal involved a hike in Eskom's gross debt securities and borrowings, escalating to R454.5 billion from R439 billion. Additionally, municipal debt soared to R63.7 billion with no concrete blueprint to ensure payment from defaulting municipalities.

Eskom's technical outlook too belied optimism with the energy availability factor (EAF) reporting a decline to 54.49%. The unplanned outages in the quarter were 16,718 MW, leading to load-shedding varying between stage 2 and 6.

Despite spending less on OCGTs, Eskom had to resort to using them regularly to meet demand. In a potential ray of relief, the Eskom Debt Relief Act, which came into effect on 7 July, sees the National Treasury pledging R254 billion over the next three years to alleviate Eskom's burgeoning debt.

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