South Africa’s state-owned power utility has reported a second consecutive annual profit, but rapidly rising municipal arrears and weaker electricity sales remain serious risks to its recovery.
Eskom recorded a profit after tax of R30.3 billion for the financial year ended March 2026, more than double the R14.0 billion reported a year earlier, according to results released on Monday, 31 August.
The financial improvement was accompanied by a sharp reduction in load shedding. Reuters reported that Eskom imposed scheduled power cuts on only four days during the reporting period, compared with 329 days in the 2024 financial year.
Operational gains support the turnaround
Eskom’s stronger performance reflects improved plant reliability, lower use of costly diesel-powered generation and a 12.7% average increase in electricity tariffs. SAnews, the South African government news service, said the utility’s operational recovery has now been matched by a healthier balance sheet, improved liquidity and positive credit-rating actions.
The reduced frequency of load shedding is economically important. Persistent power cuts previously disrupted households, factories, mines and small businesses while forcing many firms to spend heavily on backup generation.
However, the improvement in Eskom’s reported profit does not mean that its financial challenges have been resolved. Electricity sales volumes fell by 6.2% during the year, indicating weaker demand even as tariffs increased.
Municipal debt remains the central threat
Unpaid municipal accounts rose by 17.9% to R111.6 billion. Municipalities and metropolitan areas account for more than 40% of Eskom’s electricity sales, making payment failures a direct threat to the utility’s cash flow.
Eskom warned that municipal debt could reach R358 billion by the 2031 financial year if decisive corrective action is not taken. Chief financial officer Calib Cassim said earnings would have been about R15 billion higher if the utility had collected the R15.8 billion owed by municipalities during the latest year.
Gross debt also increased to R356 billion at the end of March, from R327.7 billion a year earlier. This leaves Eskom carrying a substantial debt burden despite its improved operating position and two consecutive years of profitability.
What the results mean for South Africa
The results provide evidence that Eskom’s generation recovery programme is producing material gains. More reliable electricity supply can support investment, production and employment while reducing the direct cost of power interruptions.
The municipal arrears, however, connect Eskom’s recovery to a wider crisis in local government finances and service delivery. Without a sustainable arrangement for collecting current accounts and addressing historical debt, the utility may struggle to finance maintenance and new infrastructure without further state support.
The figures also underline the pressure on households and businesses: tariff increases have helped rebuild Eskom’s revenue, but they have coincided with declining electricity sales and continuing affordability concerns.
Sources
- Reuters: Eskom doubles annual profit, but weak sales and municipal debt cloud outlook
- SAnews: Eskom records second year in the green
