Staggering R55 billion loss for Eskom

National power utility Eskom has recorded a massive R55 billion after-tax loss for the 2024 financial year – although the group expects to swing into profit in 2025.

Reporting its 2023/24 financial results on Thursday (19 December), Eskom noted that its 2024 financial year was “exceptionally challenging, operationally and financially.”

The results reflect the full year ending 31 March 2024, with the national utility acknowledging that they are being published very late.

It attributed delays in publishing its full-year finances to issues with its online vending system, where challenges with the bulk generation of illegal prepaid tokens led to delays, as well as challenges with the National Transmission Company (NTCSA) unbundling.

This means that the group is delivering the bad news of a terrible financial year in 2024, long after things have improved at the company.

FY2024 saw an exceptionally poor performance by Eskom:

• 329 days of load shedding – the worst on record
• OCGT spend of R33.9 billion
• Loss before tax of R25.5 billion
• Loss after tax of R55 billion
• Municipal arrear debt escalated to R74.4 billion
• Breakdown in internal controls and matters leading to repeat audit findings

However, the group is far more optimistic about FY2025, where it anticipates a significant swing into profit – currently projected at R10 billion.

The group said that FY is showing a near-complete reversal of the ills of 2024:

• There has been no load shedding, with over 250 days of steady electricity supply
• There have been savings on OCGT spend of R11.9 billion during the first six months
• After-tax profit of more than R10 billion is forecast for the year
• The group is enforcing discipline and adherence to internal controls

This does not mean the 2024 performance can be hand-waved, however.

The net loss of R25.5 billion is on top of the R34.6 billion recorded in FY2023 when the worst of load shedding emerged. The loss after tax of R55 billion is more than double the post-tax loss in 2023 (R26 billion).

Eskom noted that its loss after tax was affected by a once-off accounting adjustment to deferred tax related to the NTCSA separation.

In practical terms, the group explained that the transmission business was a profitable part of the company, which is no longer recognised as part of Eskom’s financials.

While the group expects to eventually return to profit, the remaining components cannot generate the taxable income to fill the gap.

This loss also came despite revenue increasing to R296 billion for the year, as the group imposed a huge 18.65% tariff hike on its customers.

Eskom said that while revenue grew by 14%, driven by the 18.65% tariff increase,this was tempered by a 3% decline in sales volumes impacted by load shedding and growth in self-generation.

“Electricity theft through illegal connections, meter tampering and the use of illegal electricity tokens on prepaid meters further reduced sales volumes, with an estimated 13.9TWh lost (8% of sales) during the year (2023: 13.4TWh),” it said.

Looking ahead

Looking at projections for 2025, Eskom said that things are likely to improve significantly.

Already during the first six months of the 2025 financial year, performance at the group’s coal-fired power stations has shown tremendous improvement, leading to the easing of generation supply constraints, with no load shedding during the period.

“As a result, Eskom experienced growth in sales and revenue, coupled with a reduction in primary energy costs, which had a hugely beneficial impact on financial performance,” it said.

This, together with the debt relief support by the government and the 12.74% tariff increase for the 2025 financial year, has led to a significant improvement in liquidity, it said.

The group has also established a programme to enhance its operational performance, which is aimed at boosting efficiency and reducing costs.

Combined, these measures should see the company return to profitability.

“Based on the latest estimate, a profit before tax of over R10 billion (unaudited) is projected for the 2025 financial year, together with a projected improvement in Eskom’s cash position. T

“This is mainly due to an improvement in Eskom’s operating cash flows linked to the tariff increase, which came into effect on 1 April 2024, higher local and internal sales, improved plant performance and lower-than-expected spend on OCGTs, IPPs and energy imports, together with the diesel rebate from SARS,” it said.

However, the group warned that the growing municipal debt remains an existential problem for the group. With no end in sight for the trend of municipalities not paying for electricity, the group is projecting municipal debt mounting to between R95 billion and R110 billion by the end of FY25.

Despite this major challenge, the group said that it would focus on boosting the grid and reducing unavailability.

The imminent synchronisation to the grid of Kusile Unit 6 will further assist the grid, even though the unit will not be operating at full power until commercial operation in mid-2025.

Medupi Unit 4, which has been in extended inoperability since a generator explosion in August 2021, is also expected to return to service by March 2025.

“Our collective focus remains on further reducing unplanned unavailability. We aim to reach an EAF level of 70% during the month of March 2025 and an average EAF for the year of around 62%.”

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