Eskom reports massive profit slide

State energy supplier, Eskom has reported a big decline in profit for the year ended March 2013, to R5.18 billion, from R13.25 billion in 2012.

Revenue, however, improved 12.2% to R128.9 billion, from R114.8 billion for the period, primarily as a result of hiked electricity tariffs.

“Revenue growth has been offset by escalating operating expenditures mainly due to an increase in primary energy costs,” Eskom said.

Primary energy costs increased from R46 billion to R60 billion.

Eskom, which supplies approximately 95% of South Africa’s electricity, cheered the fact that it “kept the lights on amid increasingly difficult circumstances”.

It also noted that it has secured 82.9% of a R300 billion funding plan, while operational costs rose from R44.8 billion to R57.7 billion.

Eskom electricity sales
Eskom electricity sales

As at 31 March 2013, Eskom noted that it had 46,266 group employees, up from 43,473 in 2012, serving 5.0 million customers, up from 4.9 million before.

Electricity sales of 216,561GWh, was down from 224,785GWh in 2012, while the group reported electricity revenues of R126.7 billion, from R113.0 billion in 2012.

Looking ahead, CEO Brian Dames said Eskom faces acute challenges in the new financial year, including the assurance that the Medupi project delivers its first power to the national grid, and that significant progress is made towards the delivery of first power from Kusile and Ingula within the next two years.

On Monday, Eskom said that the first unit at Medupi, will be pushed back to the second half of 2014, from an initial timeframe of December 2013.

An additional challenge would be “re-engineering our business to adapt to the limits imposed by the 8% annual average tariff increase that the National Electricity Regulator of South Africa (NERSA) granted us for the next five years,” Dames said.

The chief executive said that NERSA’s decision had left Eskom with an expected revenue gap of R225 billion over the next five years. He said the group would explore funding alternatives, align capex programme in line with available funding options, and re-open the tariff discussion with NERSA.

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Eskom reports massive profit slide