By Ukumbi Afrika 
Johannesburg—South Africa's state-owned electricity utility Eskom more than doubled its annual profit in the financial year ended March 2026, helped by higher electricity tariffs and a significant improvement in operational performance.
Eskom reported R30.3 billion ($1.9 billion) in profit after tax, up from a restated R14.0 billion a year earlier. The result marks Eskom’s second consecutive annual profit after the utility returned to profitability for the first time in eight years in the previous financial year.
Power Cuts Fall Sharply
Eskom's financial recovery has coincided with a major improvement in electricity supply.
The utility implemented rolling blackouts on only four days during the financial year, compared with 13 days a year earlier and a record 329 days in 2024.
The reduction in power cuts represents a significant turnaround for an electricity system whose reliability problems have constrained South Africa’s economy for more than a decade.
Higher Tariffs Offset Falling Sales
Eskom's revenue increased 4.1%, supported by an average 12.7% increase in electricity tariffs.
However, electricity sales volumes fell 6.2%, highlighting continued weakness in demand and raising concerns about the sustainability of the utility's financial recovery.
Outgoing Chief Financial Officer Calib Cassim told Reuters that weaker electricity sales would weigh on Eskom's results during the current financial year.
The idling of the Mozal aluminium smelter in Mozambique is also expected to affect performance after the facility was placed under care and maintenance following a failure to reach a tariff agreement with Eskom.
Municipal Debt Becomes Major Risk
Despite the stronger profit, Eskom continues to face significant financial pressure from unpaid municipal electricity bills.
Gross debt stood at R356 billion at the end of March, up from R327.7 billion a year earlier.
Municipalities and metropolitan areas account for more than 40% of Eskom's electricity sales, making their ability to pay a critical issue for the utility.
Municipal debt increased 17.9% to R111.6 billion during the year. Eskom warned that the figure could rise to as much as R358 billion by the 2031 financial year without decisive intervention.
Cassim said Eskom's earnings could have been approximately R15 billion higher if it had collected the R15.8 billion owed by municipalities, because revenue from non-paying municipalities is recognised only when cash is received.
“You have to solve the municipal debt, ” Cassim said, adding that Eskom could potentially execute its capital requirements without government support if the municipal debt problem is addressed.
Political Pressure Ahead of Municipal Elections
The debt issue comes as South Africa prepares for municipal elections on November 4, placing additional pressure on local governments to improve service delivery and strengthen their finances.
President Cyril Ramaphosa’s African National Congress (ANC) is facing pressure to improve municipal performance after its share of the vote declined in successive elections.
For Eskom, the challenge is increasingly shifting from simply keeping the lights on to ensuring that improved operational performance translates into sustainable cash flow.
Source: Reuters
Reporting: Sfundo Parakozov
Editing: Kirsten Donovan and Mark Potter