Eskom 2023 Financial Snapshot: Ups, Downs, and the Road Ahead

Top-line Highlights

• Revenue Jump: A leap to R259.5 billion, thanks to a 9.61% tariff spike. However, a 5% slump in sales volumes did dent this.
• EBITDA Plunge: A considerable decrease from R53 billion (2022) to R38 billion (2023).
• Operating Profits and Losses: Operating profit nosedived to R5.6 billion from R20.9 billion. Net loss post-tax also rose, standing at R23.9 billion, marking a sharp contrast from R11.9 billion the prior year.
• Concern Points: Arrear municipal debt shot up to R58.5 billion, and the gross debt of R424 billion posed significant debt servicing challenges.

In-Depth Breakdown

A Year of Challenge for Eskom: The year ending March 2023 wasn’t particularly kind to Eskom. With operational and financial metrics both spiralling downwards, the energy giant registered a net loss post-tax of R23.9 billion, markedly up from its R11.9 billion loss in 2022. One of the most significant strains on the balance sheet? The open-cycle gas turbines (OCGTs) expenditure. The number soared to R29.7 billion, almost twice the R14.7 billion from the previous year.

Eskom’s Acting Group Chief Executive, Calib Cassim, provided a candid view, “Although the financial loss was projected earlier in the year due to several factors, the results are not telling a positive story.” But he added an optimistic note, believing in the potential of the Generation recovery initiatives. A hope to tackle the menace of load shedding remains alive.

Deteriorating Performance Metrics: With the energy availability factor (EAF) dropping to 56.03%, unplanned load losses rose to 31.92%. The year also saw 280 days of load shedding, heavily influenced by delays in adding more capacity to the national grid. Incidents like the Kusile Power Station’s flue gas duct failure further compounded the power challenges.

The Silver Lining: Amid the challenges, some positive strides were made. The Generation Recovery Programme showcased promising signs, with targeted stations like Duvha and Kendal seeing gradual improvements. Further, Kusile Unit 4 went into commercial operation on 31 May 2022.

Network Performance: While the transmission network faced hurdles, the distribution network fared better. A substantial 326km of transmission lines were added to fortify the grid. Koeberg Power Station’s nearly four-decade-long legacy of reliability stands as a testament to Eskom’s capacity. Plans to extend its operation for another two decades are in the works.

Financial Insights: Eskom’s Acting CFO, Martin Buys, pointed out that while revenues climbed by R11.9 billion, other financial metrics like the 5% drop in sales volumes and escalating primary energy expenses presented challenges. With the debt standing at a hefty R389 billion in 2022, it surged by 2% the following year.

In addition, Eskom secured R59.9 billion in funding and an equity support of R21.9 billion in 2023. This might see an uptick with the introduction of the Eskom Debt Relief Act, 2023.

However, “Our biggest financial challenges remain the lack of cost-reflective tariffs, excessive use of OCGTs, above inflationary cost increases, non-payment by customers and Eskom’s debt burden,” stated Buys.

Looking Ahead

A positive financial turnaround is anticipated in FY2025. This optimism is rooted in operational enhancements, the expected benefits of the debt relief package, and a continued focus on streamlining efficiencies.