Fin24

Price hikes boost Eskom's bottom line

2012-06-14 13:12

Johannesburg - Power utility Eskom reported a nearly 60% rise in full-year profit on Thursday owing to higher tariffs and said it would meet power demand during the winter, despite tight supplies.

State-owned Eskom, which supplies 95% of South Africa’s power, said profit in the year to end-March rose to R13.2bn from R8.4bn the previous year.

Cash-strapped Eskom has been struggling to raise the money it needs to build plants to avoid a repeat of a crisis that forced mines to shut for days in 2008 at a cost of billions of rands, but the utility has since turned the corner.

“We have secured 78% of our R300bn funding programme over the next five years and the rest will come through the roll-out of our bond programme,” finance director Paul O'Flaherty said.

He said the utility would tap international markets when the time was right, although there was nothing imminent for now.

Eskom has become more financially viable and has introduced steep increases in power tariffs in recent years to move the rates to cost-reflective levels.

It expects power supply to be tight over the next few years until the first of new power plants comes on stream by the end of next year.

The utility will add nearly 12 000 MW to the grid by 2019, which should relieve tight supplies in the world’s top maker of platinum and ferrochrome.

In case of a power deficit, the utility plans to use more expensive open cycle gas turbines to avoid blackouts. Stockpiles of coal, which feed more than 80% of its power plants, were at a healthy 39 days, it said.

During the winter season - from June to August - power usage is at its highest. Peak demand during this winter is forecast at just under 37 000 MW.  

Eskom's primary energy costs rose to R46.3bn from R35.8bn due to higher coal prices. Revenue increased to R114.8bn from R91.4bn. 

Comments
  • Yusuf - 2012-06-14 14:42

    lol... sucessful companies to stay afloat need to make money.. if they didnt, would you trust them to generate power? power generation industry at cheap prices have a dead time of around 15 years ROI, since thats how long it takes to make a power station, plus...loaned money =300bln, interest to pay for the year = over 100 bln... positive profit = 13 bln... releatively... Eskom is just getting by ... better than previously.

      adrian.dewinter.7 - 2012-06-15 04:33

      I absolutely love the opening paragraph of this article: "Power utility Eskom reported a nearly 60% rise in full-year profit on Thursday owing to higher tariffs and said it would meet power demand during the winter" It's like magic, you get 60% rise in profit and POOF you have enough power for winter, even though the first power station isn't finished.

  • David - 2012-06-14 14:47

    All good and well to push up prices and then pat yourself on the back for making a profit. Us consumers would like to see what cost-saving measures have taken place, and what costs/inefficiencies have been reduced. Merely stating that costs are up due to higher coal prices is disingenuous at best.

  • MefrouwPoefparra - 2012-06-14 15:19

    Now that's nice, need more profit, hike your prices. You are a monopoly, after all. Better management, better financial planning, better cost management en wat nog can go take a hike.

  • MefrouwPoefparra - 2012-06-14 15:19

    Now that's nice, need more profit, hike your prices. You are a monopoly, after all. Better management, better financial planning, better cost management en wat nog can go take a hike.

  • johann.visser.98 - 2012-06-14 15:35

    another anc ruled beeeeee insiative that has failed due to corruption and mismanagment,well done ......all at the expence of the ordanary south african,why do people still vote and support corruption...

  • johann.visser.98 - 2012-06-14 15:48

    just another reason not vote ANC their systems dont work.

  • andynct - 2012-06-14 16:07

    PR disaster ESKOM. Having a huge song and dance like last year about all the profits you making hand over fist, not good. Now your unions will want massive increases and consumers want massive cuts.

  • zinhle.s.gumede - 2012-06-14 16:34

    what is Eskom goin to give back to their customers?

  • Vasee - 2012-06-14 18:40

    Escom is a parastatal and a "parasite"which breathes on the public for its funds.Why are we being overcharged for electricity when we should be paying the inflation rate for the year.The 13 bil.profit is a disgrace when the poor consumer was fleeced .A realistic profit should be somewhere below the rate of inflation for the year. How much of this money is squandered on parties,bonuses and looking after expatriates with all the trimmings of a good life.What about the execs.who fall by the wayside who get huge golden handshakes running into millions. This is how taxpayers and public money gets abused through stealing and corruption. Will Escom allow the public protector to investigate if there are any irregularities. We the public should be given a break from these huge increases as th fat cats in Escom get fatter while being on the gravy trian.

  • IcemanGP - 2012-06-14 19:52

    ANC fat cats must be laughing all the way to the bank.

  • dave.ducker.3 - 2012-06-15 08:40

    Well done on getting the profits up, but this is quite easy to do when you increase your selling price etc.. I have two questions however, firstly how much is owed to Escom in outstanding bills and secondly why is it near impossible for a privately owed company to supply electricity into the grid?? I know there are certain issues supplying into the grid but they are not that difficult to overcome. If you have a monoply then we just have to accept it. Look at Telkom, basically a non featuring entity...

  • JohnnoBfree - 2012-06-15 10:32

    Time to go off the grid and teach these suckers a lesson. LED lighting, small wind generators, solar panels and inverters to make this all possible. Cook on gas.

  • andynct - 2012-06-15 10:38

    7% of Eskom employees hit the dislike button.

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