JOHANNESBURG, SOUTH AFRICA – Eskom has more than doubled its annual profit to R30.3 billion, marking a second consecutive profitable year as improved power generation and sharply reduced load shedding strengthen the recovery of South Africa’s state-owned electricity utility.
The group reported profit after tax of R30.3 billion for the financial year ended March 2026, up from a restated R14 billion a year earlier. Revenue increased 4.1%, supported by a 12.74% average electricity tariff increase. Improved plant performance also reduced Eskom’s reliance on expensive diesel-fired generation.
South Africa experienced only four days of load shedding during the financial year, compared with 13 days a year earlier and 329 days in 2024. The improvement represents a major shift for a utility that spent years battling power shortages, ageing infrastructure, heavy debt and operational failures. Persistent load shedding previously disrupted businesses, constrained investment and became one of the biggest obstacles to economic growth in Africa’s most industrialised economy.
Eskom’s latest results, however, reveal a more complicated challenge as the utility becomes more profitable while selling less electricity. Electricity sales fell 6.2% to 178 terawatt-hours during the year, with Eskom attributing the decline to weaker industrial demand, growing self-generation and improved energy efficiency among customers.
Industrial electricity demand has come under particular pressure as large businesses reassess their dependence on the national grid. Mining companies and other major energy users have expanded renewable power procurement to reduce costs, strengthen energy security and meet emissions targets. The shift means Eskom must increasingly compete for electricity demand after spending years struggling to produce enough power.
Improved generation performance has created an estimated two to three gigawatts of surplus capacity. Eskom wants to use that additional power to attract new industrial customers and emerging sources of demand, including data centres and electric vehicle charging. The utility is also exploring ways to retain energy-intensive industries through more competitive electricity arrangements.
Municipal debt presents a more immediate threat to Eskom’s financial recovery, with municipalities and metropolitan areas owing the utility R111.6 billion at the end of March. The figure increased 17.9% from the previous year. Municipal customers account for more than 40% of Eskom’s electricity sales, making their ability to pay critical to its long-term financial stability.
Eskom estimates municipal arrears could reach R358 billion by 2031 without decisive intervention. Outgoing Chief Financial Officer Calib Cassim said the utility could have recognised around R15 billion more in earnings if municipalities had paid R15.8 billion owed during the financial year. Eskom recognises revenue from non-paying municipalities only after receiving the cash.
The scale of the problem became clear during a recent dispute with Johannesburg. The City of Johannesburg and City Power paid Eskom R5.25 billion in overdue electricity debt in August after the utility threatened possible supply reductions and legal action. Eskom withdrew that process after receiving the overdue amount, although the wider municipal debt problem remains unresolved.
The utility’s own borrowing also increased during the financial year, with gross debt rising from R327.7 billion to R356 billion by the end of March. Despite those pressures, Eskom’s improved operational position gives management greater room to invest in the electricity system.
Eskom plans R343 billion in capital investment over the next five years, with transmission receiving 46% of that spending and generation accounting for 36%. Expanding transmission infrastructure has become increasingly important as South Africa adds renewable energy projects in areas where existing grid capacity remains constrained. New transmission lines will influence how quickly private solar, wind and other generation projects can connect to the national system.
Eskom also faces a rapidly changing electricity market as mining companies, manufacturers and commercial users increasingly produce their own electricity or buy renewable power from independent generators. Sibanye-Stillwater has contracted 835 megawatts of renewable capacity and expects renewables to supply about 64% of its South African energy needs by the end of 2028. Anglo American is also developing renewable capacity through its Envusa Energy partnership with EDF.
Those investments do not remove Eskom from South Africa’s energy system because large industrial users still depend on the utility for electricity supply, transmission infrastructure and grid stability. They do, however, signal a significant change in the relationship between Eskom and some of its biggest customers.
South Africa is gradually moving away from an electricity system dominated almost entirely by one vertically integrated state utility. Private generators, renewable energy projects and increasingly independent electricity customers are becoming more important as the country’s power market evolves.
Eskom’s R30.3 billion profit represents an important milestone in that transition rather than the end of its turnaround. The utility has substantially improved electricity availability and returned to profitability after years of crisis, but it must now maintain that recovery while customers use less electricity and municipalities accumulate more debt.
The next phase will depend on whether Eskom can expand and modernise the grid, manage municipal arrears and compete effectively in a changing electricity market. Its ability to achieve those goals will determine whether the current financial recovery becomes sustainable as South Africa builds a more diverse energy system.
