Eskom releases its results for the 2022/23 Financial Year

Key Features of the 2023 Results

  • Revenue increased to R259.5 billion due to 9.61% tariff increase, however negated by a 5% decline in sales volumes
  • Decline in EBITDA by R14.9 billion, from R53 billion in 2022 to R38 billion in 2023
  • Operating profit significantly declined to R5.6 billion from R20.9 billion.
  • The net loss after tax increased to R23.9 billion, double from the R11.9 billion incurred in 2022
  • Open-cycle gas turbines (OCGTs) spent increased twofold to R29.7 billion from R14.7 billion in 2022
  • Arrear municipal debt remains an area of concern and had accumulated to R58.5 billion by March 2023
  • Gross debt of R424 billion attracted debt servicing costs of R72 billion comprising capital repayments of R39 billion and interest payments of R33 billion
  • R21.9 billion equity support was received from the shareholder
  • The energy availability factor (EAF) continued to deteriorate, reaching a low of 56.03% from 62.02% in 2022, resulting in 280 days of loadshedding
  • Generation unplanned maintenance was at 31.92% (2022: 25.35%), however, planned maintenance remained acceptable at 10.39%
  • Kusile Unit 4 achieved commercial operation on 31 May 2022
  • Transmission network performance declined while Distribution network continued to achieve good performance

Tuesday, 31 October 2023: The financial year ended March 2023 marked a disappointing period for Eskom, with the organisation experiencing a decline in both operational and financial performance. Eskom incurred a net loss after tax of R23.9 billion, a significant increase from the R11.9 billion net loss reported for the previous financial year. Primary energy expenses, specifically the expenditure to supplement generation capacity through the usage of open-cycle gas turbines (OCGTs), remained the biggest contributor to the financial loss, with a total of R29.7 billion spent on both Eskom and independent power producers (IPPs) OCGTs in the period under review. This is almost double the R14.7 billion spent in the previous year.

“Although the financial loss was projected earlier in the year due to several factors, the results are not telling a positive story. As government continues to support Eskom in improving the balance sheet and managing liquidity. We are pinning our hopes on the Generation recovery initiatives which we have put much effort in during the year to turn the plant performance around, and these have begun yielding the desired results. The recent improvement in Generation plant performance gives us assurance that we are on the right track to meet our future energy availability target, moving a step closer to addressing the issue of loadshedding. Indeed, there is a long road ahead, but we will continue to give our all, as a collective,” said Eskom’s Acting Group Chief Executive, Calib Cassim.

Generation performance continued to deteriorate with the overall EAF declining to 56.03% versus 62.02% in 2022. Generation unplanned load losses increased to 31.92% from 25.35% while planned maintenance performed at a similar level as last year, 10.39% in 2023 and 10.23% in 2022.

The supply constraints were partly worsened by the delays in connecting more capacity to the grid through IPP procurement as expected under the Integrated Resource Plan (IRP2019), resulting in a constant energy shortfall of approximately 5 100GWh for the year. This shortfall meant an increase in stages and frequency of loadshedding and over utilisation of OCGTs. Loadshedding was implemented on 280 days during the year under review.

In addition, the flue gas duct failure incident at Kusile Power Station in October 2022 resulting in units 1, 2 and 3 being out of service for almost a year, removing 2 100MW from the national electricity grid. At the same time, Koeberg Unit 1 remained on long-term outage, which is nearing completion and will be followed by the Unit 2 outage. Over and above the unavailable units at the other power stations, the unavailability of the Koeberg unit and the Kusile units meant a shortfall of approximately 3 000MW from only these two stations during the winter season. This equated to three stages of loadshedding, however collective efforts from the Eskom teams, coupled with lower than anticipated demand, ensured that the worst-case scenario of higher loadshedding stages was averted.

The Generation Recovery Programme is underway and continues to show positive signs. The six priority stations namely, Duvha, Kendal, Kusile, Majuba, Matla and Tutuka which were targeted to improve performance have shown gradual improvement. The well-performing stations (Medupi, Lethabo, Matimba and Peaking) were also safeguarded. Sustained and improved performance at these stations coupled with gains at the other power stations will enable Eskom to achieve its Generation recovery plan target of an average of 60% for the financial year and 65% for the month of March 2024.

On the new build programme, Kusile Unit 4 achieved commercial operation on 31 May 2022, Kusile Unit 5 experienced a setback and was delayed by a year due to a gas air heater fire incident in September 2022.

Distribution and Transmission networks delivered variable performance. Distribution remained more resilient, with frequency and duration of supply interruptions well within target. A total of 326km of transmission lines was added to strengthen the grid.

The Koeberg Power Station has continued to operate safely and reliably for almost 40 years. The process to amend the operating licence to enable Koeberg to continue providing safe, clean, and reliable power to the grid for another 20 years is under consideration by the National Nuclear Regulator (NNR).

The unbundling of Eskom into Generation, Transmission and Distribution is underway, with the legal separation of the National Transmission Company of South Africa (NTCSA) at an advanced stage.

Presenting the financial results, Eskom’s Acting Chief Financial Officer, Martin Buys stated that the only key financial indicator to have shown an upward trend is revenue which grew by R11.9 billion from R247.6 billion last year to R259.5 billion in the current financial year. This is mainly attributable to the standard tariff increase of 9.61% allowed by the National Energy Regulator of South Africa. The increase in revenue was however, among other factors, offset by a 5% decline in total sales volumes from 198 281GWh to 188 401GWh, primary energy expenses which increased by R22 billion, from R132.9 billion in 2022 to R154.9 billion, other operating expenditure associated with intensified maintenance  increased by R6 billion from R28.8 billion to R34.8 billion, net finance costs which increased by 12%, from R33.1 billion in 2022 to R37 billion in 2023. Eskom’s net debt was up by 2% from R389 billion in 2022 to R399 billion as at the end March 2023.

In addition to the R59.9 billion funding secured, Eskom also received R21.9 billion equity support from shareholder during the 2023 period. This is expected to increase in future with the promulgation of the Eskom Debt Relief Act, 2023 which aims to provide relief of R254 billion during the debt relief period.

Arrear municipal debt escalated to R58.5 billion from R44.8 billion in March 2022 and continues to be a serious challenge to Eskom’s liquidity and financial performance.

Cash from operations remains insufficient to meet debt servicing and some capital investment requirements.

“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. Given these circumstances, a similar net loss after tax is expected for the financial year ended 31 March 2024. This is unfortunately an undesirable situation we find ourselves in,” remarked Buys.

In conclusion, we do foresee the financial situation improving significantly in FY2025 due to a combination of Generation operational improvements, benefits of the debt relief package, continued focus on efficiencies and addressing internal control environment.


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