Eskom has reported a second consecutive annual profit as improved plant performance, lower diesel use and tighter cost control strengthen South Africa’s state-owned power utility. But a decline in electricity sales shows that the company’s recovery is unfolding alongside a fundamental change in the country’s power market.
For the year ended 31 March 2026, Eskom reported group profit after tax of R30.3 billion, more than double the restated R14.0 billion recorded a year earlier. Its EBITDA margin rose to 30.63% from a restated 28.75%, according to the utility’s annual results announcement.
Operational recovery strengthens
The financial improvement follows a period in which Eskom has focused heavily on restoring the reliability of its generation fleet. Better plant availability has reduced dependence on expensive open-cycle gas turbines and helped stabilise electricity supply after years in which load shedding became one of the most visible constraints on South Africa’s economy.
Eskom’s results therefore mark an important change from the severe operational and financial pressure that characterised much of the previous decade. The utility says execution of its turnaround strategy has strengthened operational recovery, energy security and financial sustainability.
Yet the headline profit does not mean the structural challenges facing Eskom have disappeared. Electricity sales volumes fell 6.2% to 178 terawatt-hours during the financial year, even as revenue increased. The decline matters because South Africa’s electricity system is becoming less dependent on a single vertically integrated utility.
A changing electricity market
Businesses and households have increasingly invested in rooftop solar and other forms of self-generation, while regulatory reforms are opening more space for private electricity producers. Large users are also pursuing bilateral power arrangements and renewable-energy procurement.
That transition creates a different strategic problem for Eskom. The utility needs to restore its own financial health while preparing for a market in which electricity generation is more competitive and the national transmission network becomes increasingly important for connecting new private and renewable capacity.
Grid investment is therefore central to the next phase of South Africa’s energy transition. New wind and solar projects cannot contribute fully to the system if transmission capacity is unavailable in the regions with the strongest renewable resources.
Municipal debt remains a major risk
Another unresolved challenge is money owed to Eskom by municipalities. The accumulation of municipal arrears has become a major financial risk for the utility and reflects wider weaknesses in local-government finances and electricity distribution.
That means Eskom’s second profitable year should be read as evidence of significant progress rather than the end of its restructuring. The company is operating more reliably and reporting stronger earnings, but its future will increasingly depend on how it adapts to lower sales volumes, a more diversified generation market, grid expansion and persistent distribution-sector debt.
South Africa’s power story is consequently moving into a new phase. The immediate crisis was dominated by whether Eskom could keep generating units online. The emerging question is whether a financially recovering Eskom can reposition itself successfully inside a more decentralised and competitive electricity system.
Sources
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