Eskom increases profit — but still makes R18.9 billion loss

Power utility Eskom has published its annual financial results for the year ended March 2021, revealing a slight increase in operating profit.

The increase was insufficient to offset a net finance cost of R31.5 billion for servicing Eskom’s debt, resulting in an R18.9 billion loss after tax.

However, this figure was a 7.6% improvement over the R20.5 billion loss recorded in the previous financial year.

Eskom CEO André de Ruyter said the power utility’s sales volumes were down 6.7% to 191,852GWh due to depressed economic conditions brought about by the Covid-19 pandemic.

Despite this, Eskom increased revenue by 2.4% from R199 billion to R204.3 billion, with R202.6 billion in electricity revenue due to an 8.76% tariff increase.

Andre de Ruyter, Eskom CEO

On the operational side, generating plant performance reduced from an energy availability factor (EAF) of 66.64% to 64.19% due to higher planned maintenance, which De Ruyter said was a short-term trade-off for longer sustainability.

Eskom explained that high unplanned load losses resulted in capacity constraints, leading to load-shedding on 47 days, compared to 46 in the previous year.

Use of emergency generation capacity in the form of Eskom’s gas turbines remained high, at the cost of energy of R7 billion, down by around R500,000 from the year before.

Overall, De Ruyter said there was “satisfactory progress” in the generation recovery plan and improvements in transmission and network performance, although energy losses had increased.

The graphs below show Eskom’s generation and network performance from 2016 to 2021.

Confirming previous statements about a debt reduction, Eskom said gross debt and borrowings were reduced by R81.9 billion to R401.8 billion due to R56 billion in government support and strengthening of the Rand.

Net interest-bearing debt stood at R393.6 billion as of 31 March 2021.

Eskom said payment levels of customers in arrears were improving but remained below acceptable levels.

Notably, municipal arrear debt grew by R7.3 billion to R35.3 billion.

The utility said negotiations for active partnering agreements were underway with 45 municipalities for Eskom to act as agent for the supply of electricity, maintenance services, and revenue collection.

The company also contained employee costs by reducing its headcount by 2,023 (4.5%) to 42,749.

Overall, Eskom achieved cost savings of R14.4 billion against a target of R14.1 billion.

The separation of Eskom’s businesses into different entities has also gained momentum, with functional separation completed in June 2021.

Now read: Eskom exports enough power to prevent two stages of load-shedding

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Eskom increases profit — but still makes R18.9 billion loss