The Grinch that stole our Christmas lights — no festive cheer expected in Eskom financials

Eskom’s generation performance has been continually deteriorating for the last several years, which affects revenue and cash flow, while a resolution of its debt burden has still not been concluded.

Until Eskom is on a sound financial footing, it lacks the funds to invest in maintenance and the expansion of generation and transmission capacity, at a time when the economy is being crippled by daily rolling blackouts.

The utility is currently surviving on regular government bailouts, which diverts public money needed for other urgent socioeconomic interventions. But with rising costs and insufficient funds at its disposal, Eskom will continue to apply for above-inflation tariff hikes, which have become an annual occurrence.

When will the results see light?

Eskom should have submitted its FY 2021/22 results to Parliament by 30 September 2022. However, at this date, Eskom said its results would only be finalised by the end of November, with a number of reasons given.

These included the delayed appointment of external auditors and the need to restate its financials for the previous (2020/21) financial year, due to reclassification of inventory, revaluation of property and equipment, and to ensure compliance with procurement regulations.

Then in November 2022, Bloomberg reported that Eskom promised to release its year-end figures before the end of December 2022. This is the time when Eskom would normally be reporting its interim results for the current financial year.

This week, Eskom spokesman Sikonathi Mantshantsha said arrangements for releasing the 2021/22 financial results were underway, but a specific date could not yet be confirmed. He further indicated that Eskom’s 2022/23 interim results would be released during the first quarter of next year.

How 2022 may look vs 2021…

While Eskom’s sales volumes have decreased in recent years, the utility’s sales revenue continues to increase (2019/20: R199.5-billion; 2020/21: R204.3-billion), due to continued, above-inflation electricity tariff increases.

Revenue in 2021/22 is expected to be higher still, as Eskom increased its average tariffs by 15.6% on 1 April 2021, while the economy continued to recover from Covid-19. Selected commodity prices also remained strong, benefitting Eskom’s mining customers.

However, in the longer term, Eskom’s sales volumes and revenues are under threat, as more customers, including some of its largest energy-intensive users, are supplementing their energy needs with renewables and other self-generation options to ensure security of supply, contain costs and decarbonise their operations.