{"id":839134,"date":"2025-10-06T12:19:40","date_gmt":"2025-10-06T10:19:40","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=839134"},"modified":"2025-10-06T12:23:03","modified_gmt":"2025-10-06T10:23:03","slug":"ramaphosa-warns-of-eskoms-next-crisis","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/energy\/839134\/ramaphosa-warns-of-eskoms-next-crisis\/","title":{"rendered":"Ramaphosa warns of Eskom’s next crisis"},"content":{"rendered":"\n

President Cyril Ramaphosa has lauded a turnaround in power utility Eskom\u2019s financial and operational performance, but warned that its growing municipal debt issue needs to be addressed urgently.<\/p>\n\n\n\n

Eskom presented its full-year results for the 12 months ending March 2025 last week, reporting a massive swing into profit.<\/p>\n\n\n\n

The group recorded an after-tax profit of R16 billion for the year, up from a loss of R55 billion the previous year.<\/p>\n\n\n\n

While Eskom attributed the reversal to its energy generation plan and work done by its workforce in improving plant performance, this is only partially the case.<\/p>\n\n\n\n

Improvements in energy generation allowed the group to save on diesel, which it had been burning at an alarming rate to keep load shedding at bay. However, the true source of financial relief came from taxpayer bailouts.<\/p>\n\n\n\n

Around R64 billion in government support, as part of the debt takeover from the National Treasury, allowed Eskom to cover its interest payments.<\/p>\n\n\n\n

According to the Bureau for Economic Research, without the bailout, Eskom would have ended the year with a cash shortfall of approximately R38 billion, compared to its cash holdings of R23.6 billion at the start of the year.<\/p>\n\n\n\n

\u201cIn short, Eskom requires ongoing bailouts to prevent it from running out of cash,\u201d it said.<\/p>\n\n\n\n

Eskom also managed to pad its wallet through a R12 billion SARS refund on diesel, and it also benefited from a significant 12.5% increase in electricity tariffs.<\/p>\n\n\n\n

Despite this more grounded assessment of Eskom\u2019s turnaround, Ramaphosa said that the utility\u2019s management should be praised for the operational changes.<\/p>\n\n\n\n

\u201cAs the reliability of Eskom\u2019s coal-fired plants has improved, there has been less need to burn diesel, resulting in approximately R16 billion in savings on diesel costs,\u201d he said.<\/p>\n\n\n\n

\u201cIn the 2025 financial year, the country experienced loadshedding on just 13 days, down from 329 days the year before. Eskom is to be congratulated on this achievement.\u201d<\/p>\n\n\n\n

The president also noted that the return to profitability, regardless of the core sources, means that Eskom can invest in critical infrastructure and maintenance under its Generation Recovery Plan.<\/p>\n\n\n\n

To this end, he said there are plans to invest more than R320 billion in expanding existing infrastructure, while accelerating the procurement of new generation capacity, increasing private investment and pursuing structural reforms to transform the electricity sector.<\/p>\n\n\n\n

Municipal debt is a major crisis<\/h2>\n\n\n\n
\"\"<\/a>
Eskom CEO, Dan Marokane<\/figcaption><\/figure>\n\n\n\n

However, the president highlighted the mounting problems with municipal debt, stating that this issue needs to be addressed urgently.<\/p>\n\n\n\n

“Municipal debt arrears have grown by 27% since the previous financial year,” Ramaphosa said.<\/p>\n\n\n\n

“That is why we continue to work with municipalities to come up with sustainable solutions that enable municipalities to settle their accounts with Eskom, as this is key to its financial viability.”<\/p>\n\n\n\n

Eskom’s auditors also flagged this as a huge risk to the utility’s ability to remain a going concern\u2014alongside its over-reliance on government bailouts.<\/p>\n\n\n\n

At the end of March 2025, municipal arrear debt amounted to R94.6 billion, representing a 27% increase from the previous year. It amounted to R103.5 billion as of the end of August 2025.<\/p>\n\n\n\n

This long-standing debt is growing at an alarming rate, and by Eskom\u2019s own admission, interventions and programmes to address it have not yielded any success.<\/p>\n\n\n\n

While Electricity Minister Kgosientsho Ramokgopa has spent the last year or so discussing a plan to address the problem, no substantive announcements have been made.<\/p>\n\n\n\n

The minister previously described Eskom’s municipal debt problem as an “unsustainable equation”, as municipalities owe Eskom R100 billion, and they themselves are owed over R400 billion from residents and customers who don’t pay.<\/p>\n\n\n\n

One of the key reasons customers don’t pay is because of affordability, with Ramokgopa repeatedly pointing out that, for many, it’s a choice between food or power.<\/p>\n\n\n\n

This then feeds back into the equation by Eskom hiking prices further, adding a larger burden onto customers\u2014with two 9% hikes coming in 2026 and 2027\u2014leading to even more unaffordability.<\/p>\n\n\n\n

Eskom CEO Dan Marokane told<\/a> Newzroom Afrika that if the rising debt trend continues, the utility may have no choice but to ask the National Treasury for another taxpayer-funded bailout.<\/strong> <\/p>\n\n\n\n

Without urgent intervention, municipal debt could exceed R300 billion by the end of the 2030 financial year, the group warned.<\/p>\n","protected":false},"excerpt":{"rendered":"

President Cyril Ramaphosa has lauded a turnaround in power utility Eskom’s financial and operational performance, but warned that its growing municipal debt issue needs to be urgently dealt with.<\/p>\n","protected":false},"author":10,"featured_media":829872,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9874],"tags":[1164,12501],"class_list":["post-839134","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-energy","tag-eskom","tag-ramaphosa"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/839134","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=839134"}],"version-history":[{"count":4,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/839134\/revisions"}],"predecessor-version":[{"id":839143,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/839134\/revisions\/839143"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/829872"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=839134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=839134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=839134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}