Eskom lost R5 billion between April and June

Eskom lost R5 billion before tax in the first quarter of the new financial year that started in April, while its net revenue increased to R70.9 billion, largely thanks to the large 18.65% increase in tariffs to direct customers that came into effect on 1 April.

National Treasury presented the power utility’s unaudited quarterly results to the Standing Committee on Appropriations on Tuesday. Eskom’s net revenue grew with R66.3 billion during the same period in 2022.

Eskom’s sales volumes were 6.2% lower than budgeted for and declined by 7% compared to the previous period, mainly due to generation supply constraints, which caused the load curtailment and rolling blackouts in the country.

The power utility’s primary energy costs were R3.5 million lower than the budgeted R43.4 billion because it spent 19.3% less than budgeted on its open cycle gas turbines, not because they were used less, but thanks to a decline in diesel prices. Eskom actually used the turbines frequently and it reported that it contributed 1 583MW to the grid with independent operators at load factors of respectively 24.2% and 22.3%.

However, this was where the good news ends. Eskom’s gross debt securities and borrowings increased to a whopping R454.5 billion by 30 June, compared to R429 billion at the end of March. The Eskom group could only raise R16 billion in funding through private placements with the disbursements only taking place in early April.

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Eskom still dealing with various challenges

Although Eskom’s profitability rations performed better than expected, the group is still dealing with various challenges that is keeping it from reaching long-term financial stability, such as poor long-term financial sustainability due to an inadequate tariff path, poor generating plant performance and escalating arrear municipal debt.

Reporting on its operational side, Eskom said its Energy Availability Factor for the first quarter was at 54.49% at the end of June, lower than the 56% at the end of March and significantly lower than the proposed target of 65%, due to unplanned losses or breakdowns, which increased to 35%.

Unplanned outages averaged 16 718MW, also higher than the assumption of 15 000MW heading into the winter months, causing rolling blackouts between stage 2 and stage 6 on 91 days in the quarter. Eskom also experienced an increase in partial or full load losses of 6 927MW.

The Eskom Debt Relief Act has since come into effect, with National Treasury contributing R254 billion over the next three years to help Eskom pay off its debt. The first tranche of R184 billion will be used for Eskom’s debt and interest payments followed by R78 billion in 2024, R66 billion in 2025 and R40 billion in 2026.