Eskom Returns to Profitability After Eight-Year Struggle, Paving Way for Debt Raise

JOHANNESBURG – In a landmark development for South Africa’s troubled energy sector, state-owned power utility Eskom has reported its first annual profit since 2017, marking a potential turning point for an entity that has pushed the country’s economy to the brink through years of unreliable electricity supply. The unexpected return to profitability, announced in the company’s latest financial results, has created a pathway for Eskom to raise critical debt from financial markets for the first time in years as it continues its ambitious restructuring program.

The utility reported a net profit of approximately 3.2 billion rand ($170 million) for the financial year ending March 2025, a dramatic reversal from the 23.9 billion rand loss recorded in the previous year. This remarkable turnaround comes despite ongoing challenges with the nation’s power grid and persistent, though reduced, periods of load-shedding that have plagued South African households and businesses for nearly a decade.

A Turnaround Forged Through Reform and Revenue

Eskom’s journey back to profitability is attributed to a multi-pronged strategy implemented under the leadership of CEO Dan Marokane. Key factors include a significant 12.7% electricity tariff increase granted by the National Energy Regulator of South Africa (NERSA), improved revenue collection from municipalities, particularly those with historically high debt, and a concerted effort to reduce primary energy costs, especially from expensive diesel-fed open-cycle gas turbines.

“This profit is not a windfall, but the result of difficult but necessary decisions and rigorous execution of our turnaround plan,” Marokane stated in the results announcement. “We have stabilized our operational and financial performance, creating a foundation from which we can now accelerate the restructuring of Eskom and the execution of our capital expenditure program.”

The improved financial health is seen as crucial for South Africa’s broader economic recovery. For years, the utility’s massive debt burden, which still stands at over 400 billion rand, has been a major concern for investors and credit rating agencies. The return to profitability signals that the government’s extensive reform program for the energy sector may finally be yielding tangible results. Regular updates on this critical economic story can be found through dedicated coverage at African News Desk’s South Africa portal, which monitors the nation’s evolving energy landscape.

Operational improvements have also played a role. While the power system remains fragile, the intensity of load-shedding has decreased compared to the crisis levels of 2022 and 2023. A focused maintenance program and the incremental addition of new generation capacity, both from Eskom’s own fleet and from private renewable energy projects, have contributed to a slightly more stable grid, reducing the need for the most expensive emergency power generation.

Debt Markets and the Long Road to Sustainability

With its balance sheet now showing a profit, Eskom’s leadership has confirmed its intention to re-enter debt markets to raise funding for critical infrastructure projects. This move represents a significant vote of confidence from management in the utility’s reformed trajectory and its ability to service new debt. For nearly a decade, Eskom has been entirely dependent on government bailouts and guarantees to stay afloat, placing an enormous strain on the national fiscus.

According to the official report covered by Bloomberg, “The utility is now preparing to approach investors for funding, a step it hasn’t been able to take for years due to its dire financial state and a 423 billion-rand debt burden. The ability to raise debt commercially is a key milestone in the government’s plan to wean the company off state support.”

However, analysts caution that the path ahead remains fraught with challenges. The profit, while symbolically important, is relatively modest against the backdrop of Eskom’s enormous debt. The utility’s operational performance, particularly the energy availability factor (EAF) of its aging coal-fired power stations, remains below target. Furthermore, the successful unbundling of Eskom into three separate entities for generation, transmission, and distribution—a cornerstone of the government’s reform strategy—is still a complex work in progress.

The looming question is whether this profit is a sustainable trend or a temporary respite driven by the hefty tariff increase. Future profitability will depend on continued operational discipline, further reduction in municipal debt, and the successful execution of the unbundling process without disrupting power supply. The utility must also navigate the country’s complex energy transition, balancing the need for reliable base-load power with the global push toward decarbonization.

For the South African public and business community, the news offers a glimmer of hope after years of energy-induced frustration. A financially healthy Eskom is fundamental to the nation’s economic growth, investment attractiveness, and social stability. While the threat of load-shedding is not yet eliminated, the return to profit and the planned debt raise mark the most positive signs in nearly a decade that Africa’s most industrialized economy may finally be charting a course out of its prolonged power crisis.