Eskom Reports First Half-Year Profit Since 2017

Eskom 6m Earnings:

• Overall, relatively positive from Eskom. Net profit of R9.2bn after tax (R216m prior), EBITDA up 58%, Revenue up 24.2%, Sales up 8%, gross debt down 15% to R392bn & gearing decreased to 61% vs 72% prior. Coal costs were also kept at a manageable rate after years of successive higher prices denting Eskom’s profitability.
• Load-shedding was worse, however, 21 days vs 19 days in 2020 and unplanned breakdowns higher and plant availability lower. Open cycle has turbines and diesel reserves were used extensively – costing R4.5bn vs R2.6bn prior.
• Leasing of land to IPPs is a solid step in the right direction and the utility is pushing for higher tariffs in 2022 (~20%+) and is currently winning the battle against NERSA.
• Unbundling seems to be making some progress, but remains slow. Looking ahead difficulties remain for Eskom with the power outlook still challenging in 2022, given the need for more maintenance amid grid fragility.
• Wage discussions with unions will also be a key sticking point in 2022.