South Africa’s state-owned enterprise Eskom has achieved a remarkable financial turnaround, reporting R23.9-billion profit before tax for the 2025 financial year – its first profitable result in eight years. Business Leadership South Africa CEO Busi Mavuso welcomed the positive development in her weekly newsletter, noting that the improved performance offers significant benefits for both the power utility and the broader South Africa economy.
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Operational Improvements Drive Eskom’s Financial Recovery
The return to profitability stems from fundamental operational improvements rather than relying solely on tariff increases, according to recent analysis. Eskom managed to grow revenue by 15% while reducing primary energy costs by 14%, demonstrating enhanced efficiency in its core operations. Reduced loadshedding played a crucial role in boosting revenue, as the utility spent significantly less on expensive diesel-based open-cycle gas turbines.
“I was impressed that this was achieved not just from higher tariffs, but from a fundamental and significant improvement in the operations of the State-owned entity,” Mavuso emphasized. The turnaround was supported by over 350 private sector experts mobilized through the National Electricity Crisis Committee, highlighting the importance of collaborative approaches to complex electricity sector challenges.
Persistent Challenges Threaten Eskom’s Sustainability
Despite the positive financial results, several concerning trends emerged in Eskom’s latest reporting period. The most pressing issue involves municipal debt, which surged 27% to R94.6-billion during the financial year. This escalating debt burden threatens the utility’s financial stability and requires systemic intervention in how municipalities manage their finances and prioritize Eskom payments.
Mavuso advocates for direct intervention to ensure municipalities prioritize electricity payments before allocating revenues to other expenditures. She also calls for technical support to improve collection rates at municipal level, noting that sustainable solutions require addressing the root causes of payment failures rather than temporary fixes.
Energy Availability and Audit Qualifications Remain Concerns
Eskom’s energy availability factor showed improvement, rising from 54.6% in 2024 to 60.6%, but still fell short of the 65% target for the year. With next year’s target set at 70%, significant additional effort will be required to achieve this ambitious goal. Industry experts note that maintaining consistent energy availability is crucial for both economic stability and investor confidence.
The utility’s auditors issued another qualified audit opinion despite Eskom establishing an audit recovery program following the 2024 qualification. “Clean audits are the minimum expectation that the public should have for the performance of State institutions,” Mavuso stressed, calling for continued improvements in record-keeping and financial management practices.
Tariff Structure and Future Market Competition
Eskom acknowledges that the double-digit tariff increases implemented over recent years are unsustainable. The utility now expects future increases to remain in single digits and must manage costs accordingly. Current financial data shows that the amount Eskom earns per kilowatt-hour has more than doubled over the past six years – a trend that cannot continue without damaging economic competitiveness.
Looking forward, competitive electricity markets must aim to push prices down for consumers while maintaining reliable supply. Additional coverage of energy sector transformations shows similar challenges facing utilities globally, with industry experts noting that traditional energy providers worldwide are confronting difficult operational and financial decisions.
Path Forward for South Africa’s Power Sector
The complex challenges facing Eskom require multi-faceted solutions that address both immediate operational issues and long-term structural reforms. Key priorities include:
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- Municipal debt resolution through improved payment enforcement and collection systems
- Operational efficiency enhancements to meet energy availability targets
- Financial management improvements to achieve clean audit opinions
- Cost containment to enable sustainable single-digit tariff increases
Data from related analysis of industrial efficiency improvements demonstrates how operational optimization can yield significant financial benefits. Similarly, industry transformation patterns in other sectors show how established utilities must adapt to changing market conditions and technological disruptions.
While Eskom’s return to profitability marks an important milestone, sustained effort and systemic reforms will be necessary to ensure long-term stability in South Africa’s electricity supply and support broader economic growth objectives.
