Eskom reports R23.9 billion loss

Eskom unveiled its financial results for the year ended March 2023, which revealed its sixth consecutive loss and a concerning financial position.

The power utility confirmed in its results presentation today that its net loss after tax increased to R23.9 billion – a significant jump from the R11.9 billion loss reported in 2022.

Eskom interim CEO Calib Cassim said the 2023 financial results reflect the company’s challenging operational performance.

Cassim revealed that municipal debt to Eskom increased from R44.8 billion to R58.5 billion over the last year.

Cassim also revealed that the utility’s energy availability factor worsened from 62.02% to 56.03% in 2023 due to generation supply constraints and shortfall from the IPP programmes.

These results follow a particularly challenging year for the power utility and South Africans.

The country experienced disastrous load-shedding. While the utility’s performance improved slightly in the past few months, 2023 is still the worst year on record for load-shedding.

Load-shedding intensified from 65 days in the 2022 financial year to 280 days in the 2023 financial year – a 331% increase.

To make up for the shortfall in revenue from increased load-shedding in 2022 and 2023, Eskom applied for record price increases, and Nersa approved Eskom’s proposed 18.65% electricity price hike in January.

Significant progress was made in addressing Eskom’s substantial debt, with the government taking on R254 billion over the next few years.

In February, Finance Minister Enoch Godongwana announced that Eskom would be receiving a R254 billion debt relief package. 

This came after the utility said in its results presentation last year that “without government support, Eskom will not be able to meet all its debt service commitments”.

This bailout is aimed at strengthening Eskom’s balance sheet to free up money for the utility to undertake plant maintenance and improve the transmission and distribution infrastructure as the country battles record electricity outages.

Eskom’s debt burden stood at R423 billion in February.

As part of the plan, the government was due to provide Eskom with three annual advances totalling R184 billion through March 2026 to repay maturing debt and cover interest costs.

This debt relief should lighten the utility’s debt burden and give it some flexibility to invest in the maintenance of its ageing power stations and the expansion of its grid.

However, one of the conditions attached to the government bailout is that the utility cannot invest in any new generation projects and must bring in private partners to help operate its plants and the electricity transmission network.

In 2023, there was also more progress made in unbundling the utility into three separate companies.

The idea of unbundling the utility was first mooted 25 years ago in a 1998 White Paper on the Energy Policy of the Republic of South Africa.

This is part of the Eskom Roadmap published in 2019, which outlined the unbundling of the utility into three separate businesses under the umbrella of Eskom Holdings. 

Eskom is set to be split into a generation company responsible for producing electricity, a transmission company that will transmit electricity and a distribution company that will distribute electricity to consumers. 

The transmission company will eventually become a fully independent state-owned company outside Eskom with a separate balance sheet.

Nersa recently granted the New Transmission Company of South Africa a transmission facilities license.

However, alongside this progress, the utility also experienced a leadership vacuum.

Eskom’s former CEO, Andre de Ruyter, surprised South Africans on 14 December 2022 when he announced his resignation after three years at the helm.

He abruptly left the power utility in February 2023 without serving out his full notice period following an explosive interview about corruption at Eskom. His replacement has yet to be identified.

In the months following his departure, the utility’s COO, Jan Oberholzer, and chairman, Mpho Makwana, also announced their resignations.

In 2023, South Africa also got a new Electricity Minister, Dr Kgosientsho Ramokgopa, whose main focus is turning the utility around and solving the energy crisis.