Eskom posts R30,3bn profit as diesel burn and municipal debt shape the year

Eskom reported group profit after tax of R30,3 billion for the financial year ended 31 March 2026, up from R14,0 billion in the prior year, on an EBITDA margin of 30,63%. It is the second consecutive year the utility has posted a profit. The figures come from the company’s own results announcement, published on 31 August 2026.

Revenue grew 4,1%, carried by a regulatory standard tariff increase of 12,74%. Sales volumes fell 6,2% to 178TWh. The steepest decline came from industrial customers, who bought 9,7TWh less, a drop of 22,5% year on year. Eskom attributes the fall to weak industrial demand, embedded self-generation and energy efficiency gains.

The profit was earned on the cost side as much as the revenue side. Utilisation of open-cycle gas turbines more than halved, cutting combined spend on Eskom-owned OCGT fuel and storage costs and on independent power producer OCGT costs by R10,6 billion. Primary energy costs rose marginally, but excluding the effect of fuel levy refunds they fell 7%. The return to service of both units at Koeberg, the fleet’s cheapest source of primary energy, supported the improvement.

The Cost Optimisation and Revenue Enhancement programme delivered R22,4 billion in savings and revenue contributions, ahead of its FY2026 target. Eskom is working towards R112 billion in cumulative savings and revenue contributions between FY2026 and FY2030.

The money is earmarked for infrastructure. Capital expenditure is set to grow from R45 billion a year in FY2026 to more than R70 billion a year from FY2029, with R343 billion of investment planned across the group over the next five years. Chairman Mteto Nyati said the performance “now allows us to reinvest in Eskom Green, in a better customer experience in distribution, in the reliability of the coal fleet, and in grid expansion so that new generation can connect”.

The balance sheet, and the bill nobody is paying

Liquidity improved. Cash and cash equivalents stood at R124,9 billion on 31 March 2026, lifted by an R80 billion debt relief payment received in March. R38 billion of that cash went to settle the ES26 bonds when they matured in April. Debt securities and borrowings fell to R356 billion at year-end and to roughly R320 billion by 30 June 2026.

Against that, municipal debt remains the largest single financial threat. Arrears rose 17,9% to R111,6 billion at year-end and reached about R119 billion by June 2026. Eskom projects that figure could climb to as much as R358 billion by FY2031 without decisive intervention. Non-payment of municipal, metro and residential accounts also cost the income statement directly: R15,8 billion of revenue, about 4,5% of the total, was not recognised because of the risk it would not be collected, up from R11,9 billion.

“When Eskom is not financially sustainable, it weighs heavily on the national budget, the sovereign credit rating and borrowing costs.” Group chief executive Dan Marokane.

Group chief financial officer Calib Cassim said the utility is pursuing alternative funding models, including public-private partnerships, private sector participation and finance mechanisms that blend commercial and concessional capital, to deliver its objectives without placing undue pressure on the balance sheet.

The year brought the utility’s first credit-rating upgrade in more than a decade, from S&P Global, Fitch and Moody’s. Cassim said that will lower future borrowing costs and contributed to South Africa’s own sovereign upgrade. Government’s debt relief support, he said, freed cash from operations for the generation recovery plan rather than debt servicing.

Surplus capacity, and a hunt for customers

Improved generation performance, combined with falling sales, has produced an estimated surplus capacity of between 2GW and 3GW over the next few years, the first time in more than a decade that the system has carried spare margin. Sales volumes have declined by about 2% a year for the past decade.

The distribution division is responding with a sales-retention and demand-activation plan. It includes negotiated pricing agreements for ferroalloy and other smelter customers, structural growth into data centres, electric vehicle charging, wheeling optimisation, renewable power purchase agreements and flexible load activation, including a Bitcoin mining pilot. The target is to stabilise sales at around 178TWh over the medium term.

Employee benefit costs rose, driven by average remuneration increases of 7%, a 3% growth in staff complement, production bonuses and a provision under the short-term incentive scheme. A total STI obligation of R5,1 billion, including a 13,5% employer pension contribution, was recognised at year-end, against R4,2 billion the year before. Eskom said the schemes are self-funded from the performance gains and operational cash flows they generate.

A qualified audit, and what closed

Auditors Deloitte & Touche issued a qualified opinion on the completeness of irregular expenditure reporting required under the Public Finance Management Act. The qualification no longer extends to the accuracy of irregular expenditure reported or to losses due to criminal conduct, both of which were removed this year. The financial statements were found to be fairly stated in all material respects and compliant with International Financial Reporting Standards.

Of the R4,9 billion in irregular expenditure incurred during the year, only R28 million related to new matters. Two historical incidents, in the procurement of fuel and construction equipment, accounted for about 70% of the total. Four of the five reportable irregularities raised in the prior year were closed, leaving environmental compliance as the only open one.

On crime, recorded physical security incidents fell 13%, estimated losses fell 18% to R191 million, arrests rose 18% to 505, recoveries rose 38% to R34 million, and 13 convictions were recorded. Eskom launched a Raptor Fusion Centre at Megawatt Park in Johannesburg on 6 February 2026 to investigate organised crime, infrastructure sabotage and significant economic offences. No Priority 1 cyber security incidents were recorded during the year.

On discipline, 96 employee disciplinary actions relating to forensic matters were concluded and 92 criminal cases completed. Eskom has established a project management office for long-outstanding forensic investigations and is appointing a panel of external forensic providers.

Calib Cassim will retire as chief financial officer in FY2027 after 24 years of service, including a year as acting group chief executive. The board has begun a succession process and aims to have a successor in office before the end of the 2026 calendar year.

On the transmission question, Nyati said the board shares President Cyril Ramaphosa’s vision of an independent transmission system operator that will own transmission assets at the appropriate point, and supports treating electricity sector reforms as a carefully sequenced process with clear stage gates.

Source: Eskom. Read the original item.