Eskom makes a large profit

Under pressure power utility, Eskom has reported a surprisingly large profit for the year ended March 2015.

“Eskom managed to deliver some good results in its business performance for the year despite the many challenges that the organisation is currently facing,” the company said.

The net profit after tax for the group for the year was R3.6 billion, although down from a 2014 total of R7.1 billion.

Revenue for the year improved to R147.7 billion, from R138.3 billion in 2014.

Electricity revenue of R597 million, mostly for municipalities and Soweto, was not recognised as it was assessed that there is a high probability that the related economic benefits will not materialise, Eskom said.

“Despite this, Eskom continues to actively pursue recovery of these amounts,” it said.

Eskom said that its good financial performance was offset by the increase in primary energy cost to R83.4 billion, from R69.8 billion in 2014.

Despite the pressure on the primary energy cost, the earnings before interest, tax, depreciation and amortisation was R25.2 billion (2014: R25.1 billion).

Electricity sales of 216,274GWh declined by 1,629GWh or 0.7% from the previous year.

“Down scaling of operations of some mines and industries and the prolonged labour unrest resulted in a negative impact on sales numbers.”

The number of employees in the group – inclusive of fixed-term contractors – decreased from 46,919 in 2014 to 46,490 tin 2015.

Some of the major challenges facing the organisation are financial and operational sustainability. NERSA’s third Multi-Year Price Determination (MYPD) of an 8% tariff increase in response to Eskom’s request of 16% resulted in significant pressure on the liquidity and going-concern status of Eskom, the group said.

Eskom said it experienced a major challenge in managing the supply and demand of electricity. A total of 548GWh was lost due to load shedding which accounted for 0.3% of total sales.

Looking ahead, Eskom said that there will be focus on accelerating the conversion of the Open-Cycle Gas Turbines (OCGTs) from diesel fuel to gas and diesel as fuel source.

“Eskom needs space to execute philosophy-based preventative maintenance to improve plant performance while avoiding load shedding,” it said.

The immediate focus will be on sustained maintenance and operational efficiency to reduce the unpredictable breakdowns in plant and in the medium- to long-term to commission new generation capacity to alleviate the constrained power supply system, Eskom said.

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Eskom makes a large profit