Last week Eskom announced its return to profitability for the first time in eight years, recording a profit after tax of R16bn for the financial year to end-March after a loss of R55bn the previous year.
The subsequent analysis of our financials has been as intense as the bouts of load-shedding we endured in the recent past. This scrutiny is entirely warranted; as a recipient of public funds our financial performance must be rigorously examined, especially after such a prolonged period of losses and a troubled history.
Commentary has delved into the technical details of this profit, often suggesting it resulted solely from government debt relief, tax adjustments and accounting gains, with assumptions that the results do not reflect long-term structural operational improvements.
By end-March municipal debt to Eskom stood at R94.6bn. While some reports have cited figures as high as R300bn and suggested a burden of R550bn over 10 years, these figures are inaccurate. They are based on worst-case scenario forecasts that assume no action from relevant stakeholders.
These analyses exaggerate the extent of the debt crisis without acknowledging proactive measures Eskom has taken to improve payment levels, such as the distribution agency agreement (DAA). We are proactively engaging with municipalities to enhance revenue collection, implementing pragmatic strategies to recover outstanding debts and exploring partnerships to improve payment compliance. We also continue to advocate for policy reforms that support sustainable municipal financial health.
We relied on the R254bn government debt relief, which has subsequently been reduced to R230bn, for its intended purpose: to provide Eskom headroom from interest repayments and for the investment required to conduct operational expenditure that includes the return to routine maintenance of our fleet.
Regardless of how our full-year 2025 numbers are interpreted the profit is structural, not merely symbolic. It is the result of the focused and systemic execution of our turnaround plan, on which the board has made significant progress during its term.
Diligent maintenance the cornerstone of optimal performance
As any engineer will affirm, diligent maintenance by skilled employees is paramount for optimal performance. The challenges we face serve as a stark reminder of this truth. Once a powerhouse of reliability, Eskom’s decline was precipitated by a critical shortage of funds allocated for routine maintenance, as well as a deskilling of our workforce.
The financial shortfall led to a cascade of failures that disrupted service and eroded public trust. Our turnaround plan reflects this cautionary tale and we will not allow history to repeat itself. Adequate resources for maintenance are not just a matter of operational efficiency; they are a commitment to safeguarding our energy security and the wellbeing of every South African.
Since March 2023 the generation recovery plan has brought back a total of 7,800MW of capacity from these assets, equivalent to seven stages of load-shedding. These were assets that had been condemned and left to waste. This capacity is designed to be always on and available 24/7, 365 days a year, providing the reliability industry needs to drive economic growth.
The debt relief has enabled Eskom to bring back national assets that citizens invested in over the years through tariffs. We are reinvesting these profits back into our assets. Over the next five years, with a continued rigorous focus on our turnaround plan and operational efficiency, we will invest more than R320bn in sustaining and expanding our infrastructure for the long-term benefit of the nation.
Enabling renewable energy integration into the grid
We cannot credibly ask customers to embrace change and a just transition, nor can we attract the investment needed to scale renewables in SA, unless we can first deliver electricity reliably. Eskom delivered a consistent electricity supply 96% of the time during our most recent financial year, compared with just 9% the previous year. Since the start of our financial year on April 1 we have delivered power consistently 97.8% of the time.
Load-shedding is largely behind us due to structural improvements in the fleet. Eskom’s now reliable electricity generation means a continuous, year-round energy supply of baseload power, which we cannot overlook. It is at the heart of the energy transition. Industry cannot operate without it; it acts as the backbone for renewable energy integration into the grid. As more renewables come online that are variable we need reliable, continuous baseload generation to offset this and maintain grid stability.
The electricity grid operates at a frequency of 50Hz, consistent with many other countries worldwide. The grid must maintain this frequency to ensure the stability of the power supply. Deviations can lead to equipment malfunctions and grid instability. Our baseload power is primarily provided by coal-fired power plants, alongside contributions from nuclear, hydroelectric and renewable energy sources.
We plan to move from high carbon to lower carbon sources of energy and continue to seek clean coal technologies to exploit our natural endowment in coal. Clean energy projects will consist of a diversified mix of renewable energy with gas and nuclear providing baseload. Gas can be brought online quickly and is cost-effective compared with long-duration battery storage or pumped hydro. In nuclear energy we possess world-class expertise in this technology and its green credentials due to our safe operation of the Koeberg nuclear power station in Cape Town for the past 40 years. Baseload power is also the foundation that enables competition.
It is often suggested that Eskom fears competition. If that were the case one must ask why we have worked so hard and diligently to fix the coal-powered fleet, which is essential for the establishment of a competitive market environment.
Unlocking the energy transition
With baseload in place and the turnaround plan delivering results, we must continue the same focus we gave to ending load-shedding to addressing the challenges of affordability, the transition to net-zero emissions and securing affordable investment. These foundations must be further strengthened by improving certainty for private investment. As seen globally, this can only occur through creating a rules-based enabling regulatory environment, with policy certainty and stable revenue and demand signals, such as through the long-term tariff paths required.
How we finance the transition arguably needs the most focus. Global low carbon finance is growing but remains far below need. Emerging markets and developing economies require $2.4-trillion annually by 2030, but receive only a fraction of this. Derisking energy transition finance in markets such as ours by scaling tools such as blended finance guarantees and mobilising institutional capital is required.
We are not celebrating prematurely and the analysis of our return to profitability should not be seen in isolation. Our focus remains on building repeatable improvements in operations, collections and governance. This profit ultimately provides confidence in the country and a platform to enable competition. It also provides further impetus for the entire industry to tackle regulatory and investment requirements to enable SA to reach the finish line in the reform of the electricity supply industry.
• Marokane is group CEO of Eskom.
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