Eskom has forecast a slight improvement in its finances for the current financial year but will remain deeply unprofitable as load-shedding continues to erode revenue and extensive use of its expensive open-cycle gas turbines hammer operating costs.
A loss of R23.2bn is forecast, compared with the R23.9bn loss in the 2023 financial year — the biggest yet — making it the seventh successive year of losses.
Eskom acting group CEO Calib Cassim said in an interview after a presentation by Eskom chair Mteto Nyati and the parastatal’s executives to parliament’s public enterprises committee on Wednesday that load-shedding and municipalities’ failure to pay for power — they currently owe R63bn — would contribute to the loss.
Cassim said the utility expects to spend R29bn this year on diesel for its open cycle gas turbines that are used to lessen the impact of load-shedding.
Cassim said the 2024 loss was forecast despite a R78bn cash injection as part of the government's R254bn debt relief package. The power utility received R16bn in August and R20bn in October, and the remaining R42bn is due over the next five months.
The money will be used for capital commitments and to service debt. Any cash generated by operations themselves will be used for capital investment, since one of the conditions of the package is that Eskom doesn’t incur further debt, Cassim said.
He emphasised that the benefit of the debt relief would only be evident after three years, when the cash generated by operations would be sufficient to pay the group’s interest bill.
Eskom expects revenue to increase by 15% in the 2024 financial year to R298bn (R259.5bn in the year to end-March 2023) and operating profit before interest and tax by 33.7% to R7.4bn (R5.6bn in 2023). The group paid R37bn in net finance costs last year.
Cassim told MPs he anticipated a significant improvement in Eskom’s financial position in the 2025 financial year when diesel costs could decrease by 50%, revenue lost to load-shedding would have eased and municipalities paid their bills.
He is confident Eskom can reduce load-shedding from the “blip” of stage 4 that was announced on Wednesday. More baseload capacity to the system would be added when Kusile units 2 and 5 come on stream in November and December. Nyati said that would lead to a huge increase in generation capacity and ease the level of load-shedding.
Eskom head of generation Bheki Khumalo said stage 4 load-shedding should improve after the weekend.
MPs raised concerns about leadership stability at Eskom, which has been without a permanent CEO since the departure of Andre de Ruyter earlier this year. The board has presented public enterprises minister Pravin Gordhan with three names and he has said an announcement would be made before the end of the calendar year. Deputy minister Obed Bapela told MPs the matter was presently with cabinet.
Nyati said all three candidates nominated by the board met their requirements.
Eskom has hired an independent forensic company to accelerate investigations into corruption and criminality at the group, he added.
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