By: Reuters

South Africa's Eskom more than doubled its annual profit in the 2026 financial year, helped by an operational turnaround and higher electricity tariffs, although weaker demand and rising municipal debt are clouding its prospects.

The state-owned power utility said on Monday it made profit after tax of 30.3 billion rand ($1.9 billion) in the year ended March, compared with a restated 14.0 billion rand a year earlier, which was its first annual profit in eight years.

Power cuts that have constrained Africa's biggest economy for more than a decade have become much less frequent. Eskom said it implemented rolling blackouts on just four days during the financial year, compared with 13 days a year earlier and a record 329 days in 2024.

Revenue rose 4.1%, reflecting a 12.7% average tariff increase, although a 6.2% decline in electricity sales volumes partly offset the gain.

Outgoing Chief Financial Officer Calib Cassim told Reuters that weaker electricity sales and the idling of the Mozal aluminium smelter, which has been placed under care and maintenance after failing to reach a tariff agreement with Eskom, would weigh on results in the current financial year.

MUNICIPAL DEBT CASTS SHADOW

Gross debt stood at 356 billion rand at the end of March, up from 327.7 billion rand a year earlier.

The biggest threat to the future of South Africa's dominant electricity supplier remains unpaid municipal debt. Municipalities and metropolitan areas account for more than 40% of Eskom's sales.

Municipal debt rose 17.9% to 111.6 billion rand and could climb to 358 billion rand by the 2031 financial year unless decisive action is taken, Eskom said.

Cassim said Eskom's earnings would have been around 15 billion rand higher had it collected the 15.8 billion rand owed by municipalities, because revenue from non-paying municipalities is recognised only when cash is received.

"Eskom can be in a position to execute the capital requirements without the need of government support, but you have to solve the municipal debt," he said.

South Africa will hold municipal elections on November 4. The biggest political party, President Cyril Ramaphosa's African National Congress, is under pressure to improve service delivery and revive struggling municipalities after its share of the vote declined in successive elections.

($1 = 16.1576 rand)

(Reporting by Sfundo Parakozov. Editing by Kirsten Donovan and Mark Potter)