Eskom’s R30.3bn profit rebound faces new risks from municipal debt
· Citizen
Eskom has posted its second consecutive profitable year, signalling a deepening turnaround built on stronger operations, tighter cost control and improved energy security, a shift executives say is transforming the utility from crisis management to long‑term sustainability.
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The utility announced its financial results on Monday, 31 August.
Profit
Eskom reported a R30.3 billion profit after tax, more than double the restated R14 billion recorded in 2025.
The improved performance was supported by an Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) margin of 30.63%, reflecting more efficient generation, reduced reliance on diesel, and disciplined cost management.
“This is the second consecutive year that Eskom has delivered a profit. That performance was earned through operational recovery and cost discipline,” said Eskom chair Mteto Nyati.
Revenue
Revenue grew 4.1% on the back of a 12.74% tariff increase, although sales volumes fell 6.2% due to weak industrial demand and rising self‑generation.
Analysis notes that Eskom is now dealing with structural overcapacity of 2GW to 3GW for the first time in more than a decade, driven by improved generation performance and declining demand.
This overcapacity, while positive for energy security, introduces new risks to revenue and asset utilisation.
Municipal arrears
Municipal arrears remain the biggest financial threat, climbing to R111.6 billion at year‑end.
According to Moneyweb, several municipalities have still not signed debt‑relief agreements required under the national programme.
These unsigned deals place multiple towns at risk of supply interruptions if they fail to comply with Eskom’s conditions.
Analysts warn that enforcing these interruptions could become politically sensitive and may test Eskom’s turnaround momentum.
Investment
According to the results, Eskom’s core programme delivered R22.4 billion in savings and revenue contributions, exceeding its FY2026 target.
Eskom said profits will be reinvested into a capital programme rising from R45 billion annually in FY2026 to over R70 billion by FY2029.
Group CFO Calib Cassim said the financial turnaround is now firmly established.
“Our operational recovery has been matched by a financial turnaround. We received our first credit‑rating upgrade in over a decade,” he said, adding that government’s debt‑relief support had been a “critical enabler”.
Economic impact
CEO Dan Marokane emphasised the broader economic impact of Eskom’s recovery.
“We are rebuilding an economic asset for South Africa. Sustained profitability and improved efficiencies enable Eskom to continue to address electricity affordability,” he said.
Load shedding
Eskom said load shedding has dropped dramatically, with only 26 hours recorded in FY2026.
Improved coal fleet performance, Koeberg’s return to service and a halving of open‑cycle gas turbine use cut primary energy costs significantly.
Eskom’s results highlight that ending load shedding was a major contributor to the utility’s profit surge, with reduced diesel burn and improved plant reliability directly strengthening the balance sheet.
Governance
Eskom also reported progress in governance, Public Finance Management Act compliance and audit recovery, with four of five prior reportable irregularities closed.
Crime‑related losses fell 18%, cyber‑security strengthened, and procurement integrity measures were expanded.
Nyati said Eskom’s recovery must support sector reform while protecting financial stability.
“We support treating electricity sector reforms as a carefully sequenced process with clear stage gates,” he said.
Eskom’s next major test will be sustaining profitability amid declining sales, enforcing municipal debt compliance, and managing structural overcapacity – all while maintaining the operational gains that ended load shedding, according to Monyweb.