In a significant turnaround, South Africa’s national power utility, Eskom, has announced a return to profitability for the first time since 2017, posting a profit after tax of R16 billion for the full year. The results, announced in Johannesburg, were attributed to a comprehensive turnaround strategy, though officials highlighted the escalating crisis of municipal debt as a major ongoing challenge.
Eskom spokespersons detailed the difficult journey to this financial recovery. They identified severe internal issues that had previously plagued the organization, including “leadership instability” and a “dysfunctional organizational culture.”
Quoting a management expert, one spokesperson noted, “Culture will eat strategy for breakfast,” emphasizing that the misalignment between senior leaders and the rest of the company had been a fundamental obstacle to achieving positive results.
The operational improvements were underscored by the Minister of Energy and Electricity, Dr. Kgosientso Ramokgopa, who pointed to a consistently improved Energy Availability Factor (EAF). The EAF is now consistently above 60%, a stark contrast to the height of the load-shedding crisis when it was around 48%.
“We have excess generation capacity and we can use that as a fighting instrument to get the economy going,” Dr. Ramokgopa said, adding that the improved performance allows for easier negotiations with large energy consumers like smelters.
Key financial drivers for the profit included a 12.74% standard tariff increase and a substantial 14% reduction in primary energy costs. The utility achieved these savings through improved coal plant reliability and a drastically reduced dependence on expensive open-cycle gas turbines, leading to diesel savings of R16.3 billion.
Eskom’s generation recovery plan was credited for the remarkable reduction in load-shedding. The utility reported 548 consecutive days without load-shedding, with 531 of those days being completely uninterrupted—a 97% availability rate. This contrasts sharply with a 9% availability rate in the prior year.
Further progress was noted in the construction of new transmission lines, with the National Transmission Company of South Africa (NTCSA) performing well from a “very low base” and preparing for a significant ramp-up to build 14,000 kilometers of infrastructure.
Despite this positive turnaround, a dark cloud looms in the form of growing municipal debt. The debt owed to Eskom by municipalities has surged by 27%, ballooning from R74.4 billion the previous year to R94.6 billion as of March 31, 2025.
Acknowledging another persistent challenge, a spokesperson confirmed that the high cost of electricity remains a concern. Eskom is now focused on modeling its business to operate on a single-digit tariff increase in the future to alleviate the burden on consumers.
The announcement marks a pivotal moment for the state-owned entity, signaling a hard-won financial and operational recovery, even as it grapples with the unresolved and worsening issue of unpaid bills from local municipalities.
