Eskom Projects R18 Billion Profit as Rising Tariffs Compensate for 5.7% Slump in Domestic Electricity Sales

Eskom's 2026 forecast shows a return to profit driven by tariff hikes, as domestic electricity sales drop 5.7% and municipal debt hits R110 billion.

By: AXL Media

Published: Mar 25, 2026, 8:27 AM EDT

Source: Information for this report was sourced from BusinessTech

Financial Recovery Masking Underlying Operational Decline

The South African power utility has reported a significant financial stabilization, projecting a profit after tax of R18 billion for the 2026 financial year. This represents a remarkable recovery from the catastrophic R55 billion loss recorded in 2024. However, internal data suggests that this return to profitability is not the result of increased efficiency or output, but rather a direct consequence of higher costs passed on to consumers. While revenue is expected to reach R355 billion, the volume of electricity actually sold to customers has dropped by 5.7% locally and 5.6% internationally, reflecting a total decline of 7.6 Terawatt hours.

The Economic Burden of Cost Reflective Tariffs

Eskom’s revenue growth is increasingly detached from its production levels, as the utility pursues what it terms "cost-reflective" pricing. Between the 2024 and 2026 financial years, the average cost per kilowatt-hour rose from 165.4 cents to a forecast of 206.6 cents. This strategy is intended to bridge the gap between the group’s current 8% return on assets and the 16% required for long-term sustainability. For the average South African household, this means that while they are consuming less electricity—either through conservation or a shift to alternative energy sources—their monthly financial contribution to the utility continues to climb.

Escalating Maintenance Costs and Infrastructure Strain

The technical reality of managing an aging national grid is placing immense pressure on Eskom’s operational budget. Repairs and maintenance costs for the current period reached R23.5 billion, exceeding the original budget by 7%. Projections indicate that by the end of the full financial year, maintenance spending will overshoot its targets by 13.3% as the utility fights to prevent further systemic failures. This increased expenditure is mandatory for the survival of existing plants, yet it consumes capital that might otherwise be used to service the group’s debt or invest in new generation capacity.