Eskom has reported a 6% decline in sales in its interim results for the six months ending in September, revealing a sustained decrease in plant performance. (Waldo Swiegers/Bloomberg via Getty Images)
Eskom has reported a 6% decline in sales in its interim results for the six months ending in September, revealing a sustained decrease in plant performance.
In its interim results released on Wednesday, Eskom said net profit after tax had decreased from R3.8 billion in the previous year to R1.6 billion in the current period.
“Sales volumes declined by 5.9%. The decline was largely a result of supply constraints, which led to load-shedding and load curtailment, coupled with lower electricity demand from customers due to difficult economic conditions and the impact of increased embedded self-generation, such as solar PV and wind,” Eskom said.
It added that there was a significant decline in the energy availability factor (EAF) the amount of energy in a specific period. The EAF to end-September for the current year was 55%, compared with 59% last year.
Eskom said that load-shedding was responsible for the significant drop in the EAF. This represents a downward spiral for the utility, which had promised the government that it would improve the EAF from 56.03% to 60% in March 2023, 65% in March 2024 and 75% in 2025.
Eskom has yet to meet its promise to increase the EAF as it continues to decline over the years. The utility’s EAF fell to 61.8% for 2021, from 65% in 2020, 66.9% in 2019 and 71.9% in 2018.
Despite efforts to increase the EAF using diesel open-cycle gas turbines to mitigate load-shedding during high-demand periods, Eskom implemented load-shedding for 81 more days than last year. It said that, for the six months ending in September, load-shedding had increased from 102 days in 2022 to 183 days this year.
It said that throughout the six months, Eskom had allocated R18 billion for diesel expenses, surpassing more than half of the R30 billion budgeted for the year.
The utility’s loss for the year comes despite a 9.61% electricity tariff increase.
Eskom’s acting chief executive, Calib Cassim said the decline also saw an increase in the utility’s debt, which went from R424 billion in 2022 to R443 billion in 2023.
In October, the utility announced a staggering loss of R23.9 billion for the financial year ended March 2023, caused in part by a significant increase in load-shedding, a growing municipal debt burden and soaring losses attributed to criminal activities.
In response, the government has allocated R78 billion of the R254 billion earmarked for debt relief over the next three years in the current fiscal year to help address Eskom’s debt problem.
In August, Eskom received R16 billion, followed by R20 billion in October, with the remaining amount scheduled to be received in the ongoing fiscal year.
Cassim said the government’s debt relief solution will go a long way towards improving “Eskom’s financial sustainability and liquidity in the short to medium term, the impact of which we have already seen with the recent credit upgrades”.
“We continue to execute our turnaround plan to improve financial and operational performance in the medium to long term.”
Cassim added that municipal debt also increased from R58.5 billion to R70 billion, despite the treasury’s plan to have some municipalities’ debt scrapped.
In May, the treasury initiated a programme enabling municipalities to have their Eskom debt written off gradually over three years. To be eligible, municipalities must adhere to financial management and other conditions, encompassing requirements such as maintaining timely payments on their accounts with Eskom.
During his medium-term budget announcement last month, Finance Minister Enoch Godongwana said that 67 applications for debt relief, amounting to R56.8 billion, had been received.
These applications constitute 97% of the total municipal debt owed to Eskom as of the end of March. Out of these, 28 applications have already been approved. The debt will be written off in annual tranches over three years.
Eskom’s acting group chief financial officer, Martin Buys, said the tariff increase of 18.65% resulted in an increase in revenue from R144.8 billion in September 2022 to R158.6 billion in September 2023, despite a decline in sales volumes.
“The unsatisfactory operational performance and depressed economic conditions continue to have a direct impact on Eskom’s financial sustainability, requiring us to make difficult trade-offs between liquidity, the utilisation of [open-cycle gas turbines] to minimise load-shedding for the benefit of the economy, as well as accommodating spend on our operational recovery and capital expenditure programmes,” Buys said.