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State-owned power utility Eskom has reported a R25.5-billion loss before tax for the financial year ending March 31, 2024, following a year marked by operational setbacks, financial strain and systemic inefficiencies.

With 329 days of loadshedding and heavy reliance on costly open-cycle gas turbines (OCGTs) during the 2024 financial year, along with escalating municipal debt, the utility continued to face persistent challenges while working towards recovery.

Despite these hurdles, Eskom's leadership, led by Group CE Dan Marokane, emphasised early signs of improvement in the current financial year.

"The 2024 financial year was exceptionally challenging," Marokane said during a presentation of the group's results on December 19. However, he added that the utility has "laid a solid foundation for recovery in the 2025 financial year".

OPERATIONAL SETBACKS

Eskom's plant availability declined to 54.56% in the 2024 financial year, compared with 56.03% the previous year, resulting in significant unplanned outages and an inability to meet 13.2 TWh of electricity demand.

This performance necessitated heavy reliance on diesel-fired OCGTs, with costs escalating to R33.9-billion, up from R29.6-billion in the 2023 financial year.

"Operational inefficiencies remain one of Eskom's biggest challenges, and the performance of our generation fleet is critical to ensuring energy security, but systemic issues such as aging infrastructure and deferred maintenance continue to undermine reliability," Marokane said.

The utility also recorded a decline in its environmental performance, with sulphur dioxide emissions increasing to 0.79 kg/MWh, up from 0.70 kg/MWh the previous year. Distribution energy losses, much of which the utility said stemmed from electricity theft, reached 13.9 TWh, reflecting broader governance issues.

Adding to these pressures was a sharp rise in municipal arrears, which grew to R74.4-billion by the end of the 2024 financial year and further to R90.1-billion by November.

The ballooning debt burden has left Eskom struggling to recover payments from municipalities, with only ten of 71 participating municipalities honouring their current accounts by late 2024.

Municipal arrears and electricity theft continue to undermine progress, with theft alone accounting for an estimated revenue loss of R23-billion yearly. Chairperson Mteto Nyati warned that failure to resolve these issues could jeopardise Eskom's long-term financial health.

CFO Calib Cassim highlighted the financial implications of these municipal arrears, stating that municipal non-payment not only affects Eskom's liquidity but also undermines its ability to fund critical maintenance and infrastructure upgrades.

Further, Eskom's after-tax loss surged to R55-billion, driven by a one-off derecognition of a deferred tax asset worth R36.6-billion following the separation of its transmission business, National Transmission Company of South Africa (NTCSA).

While this accounting adjustment impacted the bottom line, Cassim pointed to notable financial improvements enabled by government support, such as the R76-billion in government debt relief for the 2024 financial year, which the entity converted into equity.

This subsequently alleviated debt-servicing obligations and freed up cash for operations and investments. This support also allowed Eskom to increase its cash reserves to R23.6-billion, up from R7.5-billion the previous year.

Revenue grew by 14% to R295.8-billion, bolstered by an 18.65% tariff increase. However, the gains were tempered by a 3% decline in sales volumes owing to loadshedding and increased adoption of self-generation solutions, such as rooftop solar installations, which now account for an estimated 6.1 GW of capacity.

Cassim acknowledged that while tariff increases are critical to covering costs, they pose...