POWERING UP: Ramokgopa sets record straight on Eskom turnaround, buying board time for reforms
Eskom may be celebrating a solid set of financial results, but mounting arrear debt and structural liabilities reveal why full market reform remains a slow, delicate process.
Eskom, South Africa's national power utility, announced a solid profit of R30.3 billion for the last financial year. However, the company is facing significant challenges, including mounting arrear debt, structural liabilities, and governance failures that hinder its standalone viability.
During a keynote address in Johannesburg, Eskom's Minister of Electricity and Energy, Dr. Kgosientsho Ramokgopa, emphasized that black professionals are leading the turnaround efforts at Eskom. He stressed that the team's qualifications, competence, and patriotism have made a substantial impact in resolving the nation's energy crisis. Ramokgopa called for full market reform, stating that the colour of his team's skin should not define their achievements.
However, beneath the surface of the impressive profit figure, Eskom faces several structural issues. Municipalities account for 44% of the utility's sales, but payment failures pose a constant threat. Gross municipal arrear debt grew by R17 billion to R111.6 billion at year-end and increased further to R119.9 billion by June 2026. This arrear debt hinders the legal separation of the distribution division, which is crucial for the corporation's corporatisation.
Outgoing CFO Calib Cassim revealed that Eskom excluded R15.8 billion in billed revenue from its income statement due to non-collectability. Under the National Treasury's municipal debt relief programme, R3.6 billion was written off during the year, with another R4 billion scheduled for FY2027. These arrears actively block the legal separation of the distribution division, which must meet liquidity and solvency tests to satisfy lender consent.
Eskom's recent reforms, including the unbundling of its vertically integrated monopoly into focused subsidiaries and the creation of an independent state-owned Transmission System Operator (NTCSA), face challenges as well. NTCSA's value increased by R4.2 billion in FY2026, but transferring transmission assets carries tax implications and lender approval requirements.
The slow pace of transmission unbundling has been a point of contention, with private sector critics like Business Leadership South Africa (BLSA) expressing concerns. Despite the criticism, BLSA and Eskom have released a joint statement committing to full market reform while ensuring the utility's sustainability and energy security.
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