Eskom saw a 5% growth in revenue for the 2023 financial year despite a 5% decline in sales, which the power utility attributes to higher electricity tariffs.
Eskom presented its results for the year through March 2023 on Tuesday, which revealed its sixth consecutive loss and a concerning financial position.
The power utility reported that its net loss for the year increased to R23.9 billion – a 101% 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 said municipal debt to Eskom increased from R44.8 billion to R58.5 billion over the last year.
He 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.
Despite making a loss, the utility’s revenue increased by 5% from R247.59 billion in 2022 to R259.54 billion in 2023.
However, the utility’s total sales were down 5% for the period, dropping from R198. 28 billion in 2022 to R188.40 billion in 2023.
The decline in sales was seen across every sector, with the rail (22%), international (14%), residential (13%) and agricultural (11%) customers most affected.
The industrial (1%) and mining (1%) sectors were not as badly affected due to favourable commodity prices, leading to improved profit margins and higher production.
Eskom said this drop was due to supply constraints on Eskom and IPP generation, which led to load-shedding and load curtailment.
One of Eskom’s biggest challenges is selling less electricity due to load-shedding and South African households and businesses moving to more reliable and affordable alternatives.
In the 2016 financial year, Eskom sold 214 TWh of electricity. It declined to 198 TWh in 2022 and 176 TWh in 2023.
To make up for the decline in electricity sales, Eskom is increasing its prices far faster than South Africa’s inflation rate.
This is exactly what happened this year and is the reason behind Eskom’s higher revenue.
The utility said its “favourable” revenue growth was due to higher tariffs, offset by a decline in sales volumes.
It said the 9.61% tariff increase in its financial year was behind the revenue growth.
Overall, the utility said generation supply constraints, arising from poor Eskom plant performance and delays in commissioning new IPP capacity, had the most significant impact on its financial performance.
The impact of these factors was two-fold, the utility said – it increased Eskom’s reliance on expensive open-cycle gas turbines to supplement supply and negatively affected sales volumes through load-shedding and load curtailment.