Eskom reported a R5 billion loss before tax in the first quarter of the 2023/24 financial year ended June 2023.
This was revealed in Eskom’s unaudited quarterly results presented to the Standing Committee on Appropriations on Tuesday, 29 August.
Eskom’s net revenue increased to R70.9 billion for the quarter, up from R66.3 billion for the same quarter in 2022.
The revenue increase was primarily driven by the 18.65% increase in electricity tariffs for direct customers from 1 April 2023.
Sales volumes were 3 TWh, 6.2% lower than budgeted and declined by 7% compared to the previous comparable period when sales were 3.4 TWh.
Sales volumes were impacted by generation supply constraints, which resulted in load curtailment and load-shedding.
Simply put, Eskom could not generate enough electricity to meet demand. As such, electricity sales and revenue did not meet expectations.
Some consolation was that Eskom’s primary energy costs were R3.5 billion lower than budgeted at R43.4 billion.
This was mainly due to expenditure on Open Cycle Gas Turbines (OCGTs) being 19.3% lower than budgeted.
The lower OCGT spending was mainly driven by a favourable decline in diesel prices during the quarter.
However, this was where the good news ended. Eskom’s other finances painted a picture of a company in severe financial distress.
Gross debt securities and borrowings increased to R454.5 billion as of 30 June, up from R439 billion in March.
Eskom’s municipal debt skyrocketed to R63.7 billion without any concrete plan to ensure defaulting municipalities pay their bills.
While profitability ratios performed better than expected, Eskom said it is still experiencing challenges preventing it from achieving long-term financial sustainability.
“Eskom’s profitability remains hampered by poor long-term financial sustainability arising from an inadequate tariff path, poor generating plant performance, and escalating arrear municipal debt,” it said.
Eskom operational performance
On the technical side, Eskom’s energy availability factor (EAF) in the first quarter of the financial year was 54.49%.
Eskom’s EAF continued its steady decline. It is lower than the 56% EAF at the end of March and far lower than Esklom’s target of 65%.
The decrease in EAF was driven by unplanned losses, also known as breakdowns, which were up to 35% in the quarter.
Unplanned outages averaged 16,718 MW, higher than the assumption of 15,000 MW heading into the winter months.
The higher-than-expected unplanned outages resulted in load-shedding ranging between stage 2 and stage 6 in the quarter.
The utility also experienced an increase in partial or full load losses, reported at 6,927 MW over the period.
While Eskom’s spending on OCGTs was lower than budgeted, the turbines were used frequently over the quarter.
Eskom and independent OCGTs contributed 1,583 MW to the grid at load factors of 24.2% and 22.3%, respectively.
Outside the quarterly results, on 7 July, the Eskom Debt Relief Act came into effect. National Treasury will deliver R254 billion over the next three years to help Eskom alleviate its debt.
The first tranche will be R184 billion to address Eskom’s debt and interest payments as they fall due. This will follow with R78 billion in 2024, R66 billion in 2025, and R40 billion in 2026.
The second component of the debt relief will see the government take over R70 billion in Eskom debt commitments in 2026.