Eskom is on track to post its seventh consecutive full-year loss as the utility crumbles under the weight of its debt pile and high financing costs, poor plant performance and a ballooning municipal-arrears book.
The state-owned electricity provider maintained its October guidance for a full-year loss of R23.2 billion in the year to end-March 2024, it said in a statement Wednesday.
For the first half through Sept. 30, it posted a profit of R1.62 billion, from R3.8 billion a year earlier.
Historically, Eskom’s financial performance in its first half — which falls during the winter period when tariffs are higher and demand peaks — is better than the second, which is normally marked by higher maintenance and production from renewable independent power producers.
“Financial performance expected to remain constrained by poor energy availability factors as well as ongoing delays” in independent power-production programs, which raises Eskom’s reliance on expensive open-cycle gas turbines to augment supply, it said.
The losses present another blow for Eskom, which desperately needs to reduce its debt and has survived on the back of taxpayer funds. Earlier this year, the National Treasury allotted a R254 billion debt relief package to deal with some of its R400 billion in debt.
Despite the support — R41 billion of which was released to the utility — Eskom’s debt sits at 408.62 billion rand, 6% more than a year earlier.
Eskom’s operational struggles have rendered the 100-year-old company, which generates power from some 15 coal-fired plants, unable to provide sufficient power to meet the country’s demand.
This has forced it to ration electricity in a program known locally as load-shedding. The resultant erratic electricity supply has hurt the economy and pushed businesses and households to seek alternative power, in turn crimping sales and affecting revenue generation.
While electricity revenue rose 10% to R164.16 billion, sales volumes dropped 6% to R91.87 billion, dragged lower by generation-supply constraints. This was despite the average selling price soaring 17% to R1.79 per kilowatt-hour from a year earlier.
Falling sales place the monopoly in an even more precarious position financially.
While operational performance has been showing slight improvements over time, it has not been enough to remedy the poorly maintained generation units.
Debt securities and borrowings increased to R442.7 billion, in part affected by by weakening of the rand.