The truth behind Eskom’s R50 billion turnaround

Eskom’s latest financial results show a complete turnaround in performance, from a loss before tax of R25.5 billion in 2023/2024 to a profit before tax of R23.9 billion in 2024/2025. 

“Eskom is now profitable after 8 years of making losses. Another milestone achieved as we pivot the organisation towards affordable electricity cost and clean energy,” said chairman Mteto Nyati.

Some experts say that the power utility’s major financial improvements can be credited directly, however, to government bailouts and unsustainably high electricity prices. 

According to energy expert and manager of EE Business Intelligence, Chris Yelland, a few key big-ticket items contributed to Eskom’s financial turnaround. 

A credit to Eskom’s management is that there was a significant reduction in diesel spend, amounting to R16.3 billion. This was a key factor leading to Eskom’s losses in 2024, when the utility spent R33.9 billion on diesel. 

“This reduction is directly attributable to certain factors,” Yelland explained. “Including an improved performance of Eskom’s coal fleet.”

Yelland said this improvement is due to increased maintenance and improved management; however, it was made possible through government funding. 

“One of the major problems in the past was not that Eskom didn’t want to do this work; it’s that they literally didn’t have the funds,” he said. 

“The bailouts received from the National Treasury have amounted now to a couple of hundred billion,” he said, “that has freed up some cash and enabled Eskom to do maintenance.”

According to a Parliamentary appropriations meeting, by 2025/26, Eskom had received R496 billion in bailouts since 2008/2009.

Yellend added that reducing the diesel spend, however, does not bring Eskom back into profitability; it just reduces its losses.

The second contributing factor was a large tax rebate on the previous year’s diesel spend from the South African Revenue Service (SARS). 

“In the price of diesel that Eskom spent during the loadshedding years, there were a whole lot of taxes and levies intended for road users. If you’re using diesel not for transport, but for power generation, you can claim back levies from SARS,” Yelland explained. 

This amounted to R12 billion in extra income. 

Despite this, Eskom remains optimistic it can sustain this high performance, with promises to cut electricity prices and stop taking money from the national treasury. 

Inflated electricity prices and government bailouts

Eskom’s improved finances can also be credited to electricity price increases that took place in March this year. 

“There was a 12.5% price increase. When you put that in rands, that’s like R25 billion,” said Yelland. 

“The price increase brought in a lot of extra cash. That played a huge role in turning Eskom’s financial position around,” he said. 

These increases are bringing in money, but Yelland warned that this is not sustainable going forward. 

“In a competitive electricity sector, people will try in every possible way not to use Eskom’s expensive electricity,” he said. 

The last major contributing factor is government bailout money, Yelland said. This amounted to R66.4 billion this year alone, with R64 billion in the debt relief programme and R2,4 billion in an electrification grant. 

“The bailout is mostly used to repay debt, but because about R50 billion of debt was repaid, finance costs were reduced by about R5 billion. This goes straight onto the bottom line,” he said. 

All of these factors contributed to the dramatic change. However, Eskom is facing imminent threats to its performance. 

Municipal debt increased by R20 billion this year. “This is a R1.5 billion increase per month. It’s startling,” Yelland said. 

Electricity theft and fraud also increased this year. Non-technical electricity losses, which are caused by theft, illegal connections, meter tampering, and ghost vending, increased from R6.4 billion to R7 billion.

Blue skies ahead, says Eskom

Despite government bailouts and high electricity prices keeping Eskom afloat and these threats continuing to dampen performance, Minister of Electricity, Kgosientsho Ramokgopa, said he is confident Eskom can sustain these results going forward. 

Eskom drastically reduced loadshedding from 329 days in 2024 to just 13 days in 2025.

In the 2023 calendar year, loadshedding caused the South African economy to lose R2.8 trillion. In 2024, this was reduced to R481 billion.

“Following years of constrained performance, we are beginning to see the tangible benefits of our recovery strategies, with marked improvements across key financial metrics driven by the operational turnaround,” said Eskom Chief Financial Officer Calib Cassim.

Ramokgopa said that, beyond what has already been agreed to, Eskom will no longer receive any more government bailouts. Additionally, he promised to reduce the cost of electricity.

Yelland commented that only time will tell if Eskom can maintain this performance without relying on treasury funds or inflated electricity prices.