By Thebe Mabanga
Power utility Eskom has more than doubled its profit from a restated R14 billion to R30.3 billion, delivering a second consecutive profitable year, as operational performance improved and the utility outlined plans to invest R343 billion over the next five years.
Eskom said underlying primary energy costs fell by R11.5 billion after excluding the impact of the fuel levy, while reduced reliance on diesel-fired generation cut expenditure on Eskom and independent power producer open-cycle gas turbines by R10.6 billion.
The utility reached 365 consecutive days without load shedding on 15 May 2026, although the 2026 financial year was not entirely load shedding-free, with four days of load shedding totalling 26 hours recorded during the year.
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Municipal arrear debt, meanwhile, reached R111.6 billion at the end of March and had risen to about R119 billion by June, which Eskom described as its biggest financial threat.
This was revealed at the utility’s annual results presentation, held at its Johannesburg head office on Monday.
Eskom’s profit after tax increased 116% to R30.345 billion from a restated R14.041 billion in the previous financial year.
Revenue increased by 4.1%, largely driven by a 12.74% tariff increase, despite electricity sales declining by 6.2% to 178 TWh.
Board chairman Mteto Nyati described Eskom as having moved from recovery to transformation, then stabilisation and now financial sustainability.
Nyati emphasised Eskom’s balance between its commercial and developmental mandate, noting that “it is not about extraction, but reinvestment”.
Nyati confirmed Eskom’s continued unbundling as part of government’s economic reforms.
“Unbundling remains central to Eskom’s long-term transformation and is sequenced to support market reform while protecting sustainability,” he said.
Noting that Eskom needs a new business model to remain viable, Nyati said in the results presentation, “The establishment of an independent Transmission System Operator remains a critical reform that must be executed in a way that does not harm Eskom’s financial sustainability.”
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Following the legal establishment of the National Transmission Company South Africa in 2024, the next phase of the restructuring process includes the establishment of an independent Transmission System Operator (TSO).
The process has faced opposition from the National Union of Mineworkers (NUM), which has threatened legal action over Eskom’s restructuring and what it regards as privatisation.
Nyati confirmed that he had met President Cyril Ramaphosa over concerns surrounding the restructuring process and, as he delivered Eskom’s results, Ramaphosa released a statement reaffirming the government’s energy reform programme.
The Presidency said the process “reaffirmed South Africa’s energy reform path as imperative to achieve an affordable, reliable, and sustainable electricity supply for all South Africans.”
The statement went on to note: “The President reiterated government’s commitment to establish a fully independent Transmission System Operator (TSO) with ownership and control of transmission assets, to create a level playing field for competition and unlock investment in the electricity sector.”
The changes are being driven through the Eskom Reform Task Team, which includes representatives from the Presidency, National Treasury, the Department of Electricity and Energy, Eskom and the National Transmission Company South Africa.
“President Ramaphosa further emphasised that the TSO will remain state-owned, as a strategic national asset serving the public interest.”
Ramaphosa’s meeting with Nyati followed a meeting with NUM.
Nyati also praised Electricity and Energy Minister Kgosientsho Ramokgopa for bringing stability to the board following changes to its membership after the terms of several directors expired.
Nyati credited the minister for using merit to select board members, which he said “was rare in the public service.”
Eskom CEO Dan Marokane said a year of stronger operational performance had laid the foundation for the utility’s transformation.
The Energy Availability Factor improved to 65.16% in the 2026 financial year from 60.60% in the previous year, substantially higher than the levels recorded during the worst period of load shedding in 2023.
Eskom had R124.9 billion in cash and cash equivalents at the end of the financial year, up from R63.8 billion a year earlier.
However, the utility stressed that the amount should not be regarded as surplus cash because it is required for debt servicing, decommissioning obligations and its major capital expenditure programme.
The cash position was also boosted by an R80 billion government debt-relief payment received in March 2026. Eskom subsequently used R38 billion to settle its ES26 bond in April.
The utility plans to invest R343 billion in infrastructure between the 2027 and 2031 financial years, with annual capital expenditure expected to increase from R54.5 billion in 2027 to more than R70 billion by 2031.
During the 2026 financial year, Eskom installed more than 270.8 kilometres of high-voltage transmission lines and 4,000 MVA of transformer capacity.
It also installed 610,223 smart meters aimed at improving revenue collection and completed 67,578 new electrification connections.
The utility said it lost 13.1 TWh of electricity, or about 13.1 million megawatt-hours, to electricity theft.
Despite the stronger financial and operational performance, Eskom said municipal debt remained a major threat to its future sustainability.
Without decisive intervention, the utility projects that municipal arrears could rise to as much as R358 billion by the 2031 financial year.
Eskom is also exploring new revenue sources as it argues that tariff increases alone will not be sufficient to sustain the business over the long term.
“Even where customers self-generate or buy elsewhere, Eskom will retain revenue through network charges, customer wheeling and revised tariff structures which separate energy charges from the recovery of fixed costs.”
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Other measures outlined in the results include positioning Eskom as a regional electricity hub to increase exports, negotiated pricing arrangements with large industrial and smelter customers, and developing new products, including renewable energy offerings.
Eskom’s financial and governance position has improved, but challenges remain.
The utility received a qualified audit opinion for the year, relating to the completeness of irregular expenditure reporting, while its internal control environment was assessed as adequate but only partially effective.
