MEDIA STATEMENT
Pretoria, South Africa, 19 December 2024 - Public Interest SA notes Eskom’s recently announced record R55-billion after-tax loss for the 2023/24 financial year, largely attributed to the unbundling of its transmission business into the National Transmission Company of South Africa (NTCSA). While this development marks an important milestone in the reform of South Africa’s energy sector and signal a remarkable turnaround attained during the 2023/24 financial year, the associated R34-billion impairment highlights the urgent need for careful financial planning and accountability in managing state-owned enterprises (SOEs).
Eskom’s narrowed pre-tax loss of R25.5 billion—an improvement of R9 billion from the previous year—offers a glimmer of hope, reflecting some progress in operational efficiency. We commend Eskom for achieving a 14% revenue increase through an 18% tariff hike, increased planned maintenance, and steps to operationalise the generation recovery plan. Importantly, Eskom’s unaudited results for the first half of the current financial year signal further improvement, with no load shedding reported, diesel usage reduced by R11.9 billion, and a forecasted profit for 2024/25.
However, these strides are tempered by persistent and systemic challenges:
1. Municipal Debt Crisis: Municipalities owe Eskom a staggering R95 billion in arrears. This is unsustainable and unfairly burdens South African citizens who diligently pay their electricity bills. Municipalities must immediately implement robust billing systems, shift away from reliance on inaccurate estimates, and ensure accountability for debt recovery. Citizens, too, must uphold their obligation to pay for services.
2. Revenue Loss from Electricity Theft: Eskom’s estimated R23-billion revenue loss due to electricity theft underlines the critical need for enhanced security, monitoring, and prosecution of illegal connections.
3. Fraud and Corruption: The discovery of bulk generation of illegal prepaid electricity tokens through collusion between Eskom employees and external operators is deeply troubling. We call for swift and decisive action to hold those involved accountable and to plug revenue leaks. Fraud and corruption not only erode public trust but also exacerbate the financial strain on the utility.
4. Cost Pressures and Tariff Increases: While tariff hikes have supported Eskom’s revenue growth, they place an increasing financial burden on South Africans. Cost-reflective tariffs must be accompanied by significant operational efficiency improvements and a crackdown on corruption to ensure affordability and sustainability.
5. Deferred Tax Asset Impairment: The R36.6-billion derecognition of deferred tax assets highlights the financial risks of restructuring Eskom. Comprehensive financial oversight is required to ensure these reforms do not further destabilise the utility’s long-term viability.
Public Interest SA welcomes Electricity and Energy Minister Kgosientsho Ramokgopa’s call for a rethinking of municipal debt recovery strategies and urges the government to establish a clear and enforceable framework that strengthens Eskom’s financial position while holding defaulters accountable.
We acknowledge Eskom’s management and employees for their efforts in navigating unprecedented challenges, including 329 days of load shedding in 2023/24. The recent improvements demonstrate the potential of a reformed energy market, but this progress must not mask the persistent issues that threaten the utility’s sustainability.
"Eskom’s CFO, Calib Cassim, rightly noted that 2024 may be remembered as a turning point for the utility. However, for this turning point to lead to sustained success, all stakeholders—government, municipalities, businesses, and citizens—must commit to accountability, ethical conduct, and a collective effort to rebuild trust in Eskom," states Tebogo Khaas, chairman of Public Intrerest SA.
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Issued by:
Public Interest SA
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