By Lehlohonolo Lehana.
State owned power utility Eskom has reported a profit of R24.3bn for the first half of its 2026 financial year, supported by higher electricity tariffs and more stable plant performance.
Eskom has stabilised the grid, increased the reliability of its plants by making overdue repairs and ended years of frequent power cuts that crimped economic growth.
But it remains burdened by massive overdue debt it is owed by the municipalities — which it has previously warned was inhibiting its plans to unbundle the utility into three separate units — and said that it had received instructions for write-offs totalling R3.6 billion from the National Treasury.
Municipal arrears swelled to R105 billion by the end of September from R90.1 billion at the end of March, it said.
The higher tariff for the year is assisting to migrate the tariff path to more appropriate levels, positively impacting our financial sustainability, “CFO Calib Cassim said.
“The higher tariff will also lessen the burden on the taxpayer by reducing the need for debt relief support from government once Eskom is financially sustainable on a standalone basis.”
However, the utility noted that the tariff increase was partially offset by lower sales volumes, which declined by 3% over the six-month period.
Cassim said its sales volumes were impacted by ferrochrome customers in the industrial sector that experienced unplanned plant breakdowns or halted production and took smelters offline for maintenance due to poor market conditions.
In addition, he noted that the increase in embedded self-generation – mainly through rooftop solar installations – continued to drive a decline in sales volumes.
Regardless, the utility reported an interim profit of R24.28 billion after tax, marking a roughly 37% increase compared to the six months through September 2024.
This is more than the R16 billion full-year profit Eskom reported for its 2025 financial year, which marked the utility’s first full-year profit since 2017.
However, the utility noted that its financial performance in the first half of the year tends to be better than the second half, with the winter period typically characterised by higher tariffs and sales volumes than the summer period.
Therefore, it may not sustain this first-half momentum into the second half of the year.
In addition, Cassim explained that to ensure an adequate supply to sustain the increased demand in winter, less maintenance is performed in winter than in summer.
“Given this seasonality, we face financial pressure in the second half of the financial year,” He said.
Eskom expects its profit after tax for the full 2026 financial year to be at a level similar to the prior year, i.e. around R16 million, together with a projected improvement in the utility’s cash position.