- Eskom More Than Doubles Profit to R30.3bn As South Africa’s Power Crisis Eases
South Africa’s state-owned power utility Eskom more than doubled annual profit as improved plant performance sharply reduced electricity outages and expensive emergency generation, providing one of the clearest financial signs yet that the country is emerging from a prolonged electricity crisis.
Eskom reported profit after tax of R30.30 billion for the financial year ended March 2026, compared with a restated R14.00 billion a year earlier, marking its second consecutive profitable year after almost a decade characterised by financial distress and operational instability.
The turnaround was closely tied to improvements in electricity generation. Rolling blackouts were implemented on only four days during the financial year, compared with 13 days the previous year and a record 329 days in 2024.
Persistent load shedding had become one of the biggest constraints on Africa’s most industrialised economy, forcing manufacturers, mines, retailers and households to invest heavily in alternative generation while disrupting production and weakening business confidence.
A more reliable electricity system therefore potentially removes one of the structural impediments to stronger South African growth.
For Eskom itself, better plant availability has also reduced reliance on expensive diesel-powered open-cycle gas turbines.
The utility said improved generating performance and greater cost discipline lifted its EBITDA margin to 30.63%, from a restated 28.75% previously.
Its Cost Optimisation and Revenue Enhancement programme generated R22.40 billion in savings and revenue contributions during the year, exceeding its target.
The connection between operational and financial performance is particularly important.
When Eskom’s coal-fired generation fleet performs poorly, the company has historically needed to rely more heavily on expensive emergency generation to meet electricity demand.
Improved reliability therefore produces a double benefit: South Africans experience fewer outages while Eskom spends less on emergency power.
The financial recovery was also helped substantially by higher electricity tariffs. Revenue increased 4.10% during the year, supported by an average standard tariff increase of 12.74%.
Electricity sales volumes declined 6.20% to 178 terawatt-hours, partly offsetting the benefit of higher tariffs.
Eskom said weaker industrial demand, increased embedded generation and improvements in energy efficiency contributed to the fall, with industrial-sector sales alone declining by 9.7TWh, or 22.50%, year-on-year.
The utility is becoming more reliable just as some of its largest customers have become less dependent on it.
Years of load shedding encouraged mines, factories, shopping centres and households to invest in solar power and other alternatives.
South Africa’s mining industry in particular has accelerated renewable-energy investment as companies seek to lower electricity costs, improve reliability and reduce carbon emissions.
That means ending blackouts does not automatically restore the electricity demand Eskom lost during the crisis.
For the utility, maintaining profitability will increasingly require both operational efficiency and a strategy for retaining large customers in an electricity market that is becoming more decentralised.
The Mozal aluminium smelter has been placed under care and maintenance after failing to reach an electricity tariff agreement with Eskom, a development the utility expects to weigh on sales in the current financial year.
South Africa therefore faces a different electricity problem from the one that dominated the previous decade.
The immediate challenge was scarcity: Eskom could not reliably produce enough power.
The emerging challenge is how to manage an electricity system in which generation reliability improves while customers increasingly produce some of their own power and industrial demand remains weak.
Eskom nevertheless intends to use its stronger financial position to reinvest heavily in infrastructure.
Capital expenditure is expected to rise from about R45.00 billion annually in the 2026 financial year to more than R70.00 billion a year from 2029, with approximately R343.00 billion planned across the group over the next five years.
Those investments will be important as South Africa connects more renewable generation, expands transmission infrastructure and attempts to maintain reliability across an ageing power system.
But Eskom’s recovery remains exposed to one major financial threat: unpaid municipal electricity bills.
Municipal arrears increased 17.90% to R111.60 billion at the end of March and had reached approximately R119.00 billion by June 2026.
Without decisive intervention, Eskom projects municipal arrears could rise to as much as R358.00 billion by the 2031 financial year.
That trajectory presents a significant risk because municipalities and cities account for more than 40.00% of Eskom’s electricity sales.
Outgoing Chief Financial Officer Calib Cassim has warned that resolving the municipal debt problem will be essential if Eskom is to sustain profitability without continuing dependence on government support.
The utility’s stronger liquidity position also needs to be viewed against the substantial state assistance underpinning its restructuring.
Cash and cash equivalents stood at R124.90 billion at March 31, supported partly by an R80.00 billion government debt-relief payment received during the month.
About R38.00 billion was subsequently used to settle bonds maturing in April.
Debt securities and borrowings stood at R356.00 billion at year-end before declining further to approximately R320.00 billion by June.
That means the turnaround cannot be attributed solely to operational improvement.
Government debt support, tariff increases and stronger plant performance have all contributed to the recovery.
The more difficult test will come when extraordinary state support diminishes and Eskom must sustain its finances through electricity sales, cost discipline and improved collection.
Independent auditors issued a qualified opinion related to the completeness of irregular-expenditure reporting, although Eskom said previous qualifications concerning losses from criminal conduct and inaccuracies in irregular-expenditure reporting had been removed.
The overall picture is therefore one of significant progress rather than a completed turnaround.
South Africa has dramatically reduced load shedding. Eskom has returned to sustained profitability. Its generation fleet is performing better and the company is spending less on emergency diesel generation.
But electricity sales are weakening, municipal arrears are escalating and the company must invest hundreds of billions of rand to modernise and expand the grid. That makes the R30.30 billion profit an important milestone, but not yet proof that Eskom’s structural problems have been solved.
For South Africa, however, the economic significance is difficult to overstate.
For years, Eskom’s inability to provide reliable power constrained mining, manufacturing, investment and overall economic activity. If the utility can preserve the operational gains while stabilising its finances, South Africa will have removed one of the biggest barriers to stronger growth.
The country may have largely escaped the immediate era of chronic load shedding. The next challenge is ensuring that the company responsible for keeping the lights on can remain financially viable after the crisis has passed.
