{"id":805289,"date":"2025-01-02T06:27:37","date_gmt":"2025-01-02T04:27:37","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=805289"},"modified":"2025-01-02T06:27:37","modified_gmt":"2025-01-02T04:27:37","slug":"eskom-getting-replaced","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/805289\/eskom-getting-replaced\/","title":{"rendered":"Eskom getting replaced"},"content":{"rendered":"\n

Eskom\u2019s local and international electricity sales are plummeting, forcing it to increase prices, making it even less attractive as its customers move to more affordable options.<\/p>\n\n\n\n

This was revealed in Eskom\u2019s group annual results for the 2024 financial year, covering 1 April 2023 to 31 March 2024.<\/p>\n\n\n\n

Eskom said the last year was challenging given the urgent need to deliver on the Generation Recovery Plan to address South Africa\u2019s energy crisis.<\/p>\n\n\n\n

The challenges were seen in the power utility\u2019s finances. Diesel usage increased to R33.9 billion, and sales volumes declined by 3% year-on-year.<\/p>\n\n\n\n

Eskom reported a loss after tax of R55 billion, which it said was mainly due to the derecognition of a deferred tax asset of R36.6 billion.<\/p>\n\n\n\n

However, even without the derecognition of a deferred tax asset, its finances are still in a dismal state, with a net loss before tax of R25.5 billion.<\/p>\n\n\n\n

Eskom said it faced several systemic operational, financial, and sustainability issues that are being intensely focused on.<\/p>\n\n\n\n

\u201cConsequence management and interventions are being actioned to address reportable irregularities raised relating to legacy management control issues,\u201d it said.<\/p>\n\n\n\n

One of its biggest challenges is municipal debt, which is expected to reach R110 billion by March 2025.<\/p>\n\n\n\n

Calib Cassim, Eskom\u2019s group chief financial officer, said it was important to find a sustainable solution to the municipal arrear debt challenge.<\/p>\n\n\n\n

The power utility previously said municipal debt posed an existential crisis that, if not addressed, may require another bailout.<\/p>\n\n\n\n

Eskom CEO Dan Marokane added that it was important to allow Eskom to migrate to cost-reflective tariffs.<\/p>\n\n\n\n

He said this was important for Eskom\u2019s financial sustainability and to foster a competitive future electricity supply industry that attracts investment.<\/p>\n\n\n\n

\u201cAn inadequate tariff path will continue to constrain Eskom\u2019s financial position, leading to insufficient investment to sustain and expand our infrastructure,\u201d he said.<\/p>\n\n\n\n

He said it would perpetuate past operational challenges and may also necessitate further reliance on Government support beyond March 2026.<\/p>\n\n\n\n

\"\"<\/a>
Eskom CEO Dan Marokane<\/figcaption><\/figure>\n\n\n\n

Eskom in a death spiral<\/strong><\/h2>\n\n\n\n

While Marokane wants to significantly increase prices to improve Eskom\u2019s financial position, this will aggravate another problem\u2014declining electricity sales.<\/p>\n\n\n\n

Eskom\u2019s latest annual report revealed that its local and international electricity sales declined from 198 GWh in 2022 to 183 GWh in 2024.<\/p>\n\n\n\n

Despite the lower sales, Eskom\u2019s costs increased significantly over the two years. This is a double-whammy for the power utility.<\/p>\n\n\n\n

Due to its bloated workforce, corruption, mismanagement, and inefficiencies, Eskom\u2019s cost base is much higher than it should be.<\/p>\n\n\n\n

Cost-reflective tariffs mean Eskom must significantly increase prices to compensate for lower sales.<\/p>\n\n\n\n

However, it comes with a challenge. The higher Eskom\u2019s prices, the more customers will move to alternative energy solutions.<\/p>\n\n\n\n

Solar PV with battery backup is cheaper than Eskom, and many businesses and households have moved mostly off-grid.<\/p>\n\n\n\n

Independent energy expert Mohamed Madhi said price increases are needed to keep Eskom afloat.<\/p>\n\n\n\n

Due to the migration to alternative energy, Eskom is forced to make the same or more revenue from fewer clients. The only way is to increase prices.<\/p>\n\n\n\n

Madhi argues that Eskom is shooting itself in the foot with the above-inflation electricity price increases.<\/p>\n\n\n\n

\u201cWe have already reached the point where renewable electricity prices are cheaper than Eskom\u2019s rates,\u201d he said.<\/p>\n\n\n\n

Former Eskom CEO Andre de Ruyter warned that if the current trend continues, Eskom will be left with mainly non-paying customers.<\/p>\n\n\n\n

De Ruyter said that more South Africans are turning to alternative power solutions, like solar PV and battery backup, for their electricity needs.<\/p>\n\n\n\n

These are typically Eskom\u2019s paying customers, which means it may soon be left with customers who cannot afford or refuse to pay for electricity.<\/p>\n\n\n\n

\u201cIf you extrapolate from current trends, Eskom will eventually be left with a customer base of people who cannot afford electricity and therefore don\u2019t pay for it,\u201d he warned.<\/p>\n\n\n\n

Renowned economist Dawie Roodt said South Africa will have many electricity generation suppliers and private sector players in the future.<\/p>\n\n\n\n

\u201cWe are slowly, through a back door kind of way, privatising Eskom. That is what is going to happen in the end,\u201d he said.<\/p>\n\n\n\n

Roodt predicted that Eskom would go the same way as South African Airways, which means it will become irrelevant in most people\u2019s lives.<\/p>\n\n\n\n

\"\"<\/a><\/figure>\n","protected":false},"excerpt":{"rendered":"

Eskom\u2019s local and international electricity sales are plummeting, forcing it to increase prices, making it even less attractive as its customers move to more affordable options.<\/p>\n","protected":false},"author":10,"featured_media":793330,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[1164],"class_list":["post-805289","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-eskom"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/805289","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=805289"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/805289\/revisions"}],"predecessor-version":[{"id":805292,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/805289\/revisions\/805292"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/793330"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=805289"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=805289"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=805289"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}