State-owned power utility Eskom has reported a R25.5-billion loss before tax for the financial year ending March 31, 2024, following a year marked by operational setbacks, financial strain and systemic inefficiencies.
With 329 days of loadshedding and heavy reliance on costly open-cycle gas turbines (OCGTs) during the 2024 financial year, along with escalating municipal debt, the utility continued to face persistent challenges while working towards recovery.
Despite these hurdles, Eskom’s leadership, led by Group CE Dan Marokane, emphasised early signs of improvement in the current financial year.
“The 2024 financial year was exceptionally challenging,” Marokane said during a presentation of the group's results on December 19. However, he added that the utility has “laid a solid foundation for recovery in the 2025 financial year”.
OPERATIONAL SETBACKS
Eskom's plant availability declined to 54.56% in the 2024 financial year, compared with 56.03% the previous year, resulting in significant unplanned outages and an inability to meet 13.2 TWh of electricity demand.
This performance necessitated heavy reliance on diesel-fired OCGTs, with costs escalating to R33.9-billion, up from R29.6-billion in the 2023 financial year.
“Operational inefficiencies remain one of Eskom’s biggest challenges, and the performance of our generation fleet is critical to ensuring energy security, but systemic issues such as aging infrastructure and deferred maintenance continue to undermine reliability,” Marokane said.
The utility also recorded a decline in its environmental performance, with sulphur dioxide emissions increasing to 0.79 kg/MWh, up from 0.70 kg/MWh the previous year. Distribution energy losses, much of which the utility said stemmed from electricity theft, reached 13.9 TWh, reflecting broader governance issues.
Adding to these pressures was a sharp rise in municipal arrears, which grew to R74.4-billion by the end of the 2024 financial year and further to R90.1-billion by November.
The ballooning debt burden has left Eskom struggling to recover payments from municipalities, with only ten of 71 participating municipalities honouring their current accounts by late 2024.
Municipal arrears and electricity theft continue to undermine progress, with theft alone accounting for an estimated revenue loss of R23-billion yearly. Chairperson Mteto Nyati warned that failure to resolve these issues could jeopardise Eskom’s long-term financial health.
CFO Calib Cassim highlighted the financial implications of these municipal arrears, stating that municipal non-payment not only affects Eskom’s liquidity but also undermines its ability to fund critical maintenance and infrastructure upgrades.
Further, Eskom’s after-tax loss surged to R55-billion, driven by a one-off derecognition of a deferred tax asset worth R36.6-billion following the separation of its transmission business, National Transmission Company of South Africa (NTCSA).
While this accounting adjustment impacted the bottom line, Cassim pointed to notable financial improvements enabled by government support, such as the R76-billion in government debt relief for the 2024 financial year, which the entity converted into equity.
This subsequently alleviated debt-servicing obligations and freed up cash for operations and investments. This support also allowed Eskom to increase its cash reserves to R23.6-billion, up from R7.5-billion the previous year.
Revenue grew by 14% to R295.8-billion, bolstered by an 18.65% tariff increase. However, the gains were tempered by a 3% decline in sales volumes owing to loadshedding and increased adoption of self-generation solutions, such as rooftop solar installations, which now account for an estimated 6.1 GW of capacity.
Cassim acknowledged that while tariff increases are critical to covering costs, they pose affordability challenges for consumers and businesses.
“Achieving a cost-reflective tariff path remains essential for Eskom’s financial sustainability,” he said.
Additionally, longstanding issues of crime and corruption within Eskom also took centre stage during the presentation on Thursday, as Nyati outlined progress made in combating these challenges through a dedicated State Capture Task Team, partnerships with law enforcement and strengthened internal controls.
To date, 304 arrests and 17 convictions have been secured, with disciplinary action taken against suppliers implicated in malfeasance. Supplier audits resulted in 79 firms being sanctioned or suspended.
“Crime and corruption are a cancer to Eskom’s recovery, and we are determined to root them out,” Nyati said.
Eskom has also implemented a security vetting programme for critical roles, with 526 of 729 vetting cases completed. This initiative, alongside technology-driven security enhancements, aims to mitigate risks to the utility’s infrastructure and operations.
Further, a cornerstone of Eskom’s recovery strategy is its unbundling into three entities: Generation, Transmission and Distribution. With the NTCSA having become operational in July, it marked a significant milestone in this process.
Cassim noted that the separation aims to improve governance, attract private investment and prepare Eskom for a liberalised energy market.
In parallel, the utility is advancing its Just Energy Transition (JET) framework to modernise infrastructure and expand renewable energy capacity. By 2035, Eskom envisions renewables comprising 85% of its energy mix, supported by investments in grid modernisation, smart metering and microgrids.
However, delays in independent power producer (IPP) programs and regulatory approvals remain obstacles to these goals. Eskom is also grappling with the socioeconomic impact of transitioning away from coal, which dominates South Africa’s current energy mix.
Nyati emphasised the need for balanced reforms, stating that Eskom must transition to cleaner energy while addressing the socio-economic realities faced by communities reliant on coal-fired power stations.
However, while government debt relief and tariff adjustments have provided short-term stability, he added that Eskom’s sustainability depends on addressing systemic inefficiencies, improving revenue collection and fostering a high-performance culture.
Leadership stability and accountability remain key priorities, with Nyati calling for “a renewed focus on discipline and adherence to internal controls”.
SIGNS OF RECOVERY
While the 2024 financial year underscored the magnitude of Eskom’s challenges, the first six months of the 2025 financial year have shown promising improvements. For the first time in years, South Africa experienced over 250 days without loadshedding, attributed to disciplined execution of maintenance and reduced unplanned outages.
Diesel costs decreased by R11.9-billion year-on-year, reflecting lower reliance on OCGTs.
Plant availability improved to 62.97%, and an after-tax profit exceeding R10-billion is forecast for the year. Marokane attributed these gains to Eskom’s Generation Recovery Plan, which prioritises efficiency and maintenance to restore operational stability.
Eskom also expects to add 2 500 MW of capacity to the grid by March 2025, driven by the return to service of key units at Koeberg, Medupi and Kusile power stations. These efforts aim to maintain the suspension of loadshedding and ensure adequate supply during peak demand periods.
With targeted interventions, structural reforms and a commitment to operational excellence, Eskom is aiming to rebuild its financial and operational foundation.
“A sustainable Eskom is essential for powering growth in South Africa and the Southern African Development Community region,” Nyati said.
As the utility looks ahead, its leadership remains optimistic about sustaining recent momentum.
“We are committed to ensuring Eskom delivers affordable, secure and sustainable electricity to all South Africans,” Marokane concluded.
Comentarios