Johannesburg, South Africa — ESI-AFRICA.COM — 24 November 2011 – South African national power utility Eskom Holdings has reported an interim profit of R12.8 billion, compared to R9.5 billion previously, and revenue from sales was up more than R1billion to R63.9 billion for the six months to end-September.
Eskom financial director Paul O’Flaherty said almost 60% of the revenue rise had been due to the roll-out of its tariff increases. It had been announced two years ago that electricity prices would increase by an average of 25% per year over three years, this year having seen the second of those increases.
But Eskom has explained that its results tend to be highly seasonal with the bulk of its profits recorded in the first half of the year with winter months seeing increases in residential demand and higher tariffs paid by industrial clients.
Electricity sales increased by only 0.9% to 114,043 GWh in the six months to end-September, reflecting muted economic growth, labour unrest in sectors such as metals and mining, and the impact of higher tariffs.
O’Flaherty said the utility anticipated that it would break even in the second half of the year but still post a profit for the full year. The importance of Eskom achieving and maintaining profit is driven home by its debt levels.
Eskom is currently carrying R178 billion in debt on its book and it has indicated that this would grow to close on R400 billion with the next seven years as it funds its build programme.
Since 2005, Eskom has spent R141.5 billion on its build programme, which has so far added 5,381 MW of generation capacity to the national grid, as well as 3,531 km of transmission network and 17,920 sub-station transformers.
The utility said 74% of its R300 billion funding plan had been secured. Capital expenditure amounted to R24.5 billion in the first half and is seen as reaching R30 billion in the second half of the utility’s financial year.
The utility warned of a six month delay in its Medupi project due to a contractor not delivering on contract agreements.
Eskom CEO Brian Dames said Medupi was now expected to begin providing power to the grid by May 2013. The target date for the unit had been the end of 2012.
While the utility insisted that the six month delay in Medupi would have no significant impact, it did again sound a warning that the system would remain tight for the next five years and for the next two in particular.