Tariffs help Eskom up profits again

2011-11-23 14:45

Johannesburg - Power utility Eskom on Wednesday reported an interim profit of R12.8bn, compared to R9.5bn previously.

Revenue from sales was up more than R1bn to R63.9bn for the six months to end-September, from R51.1bn previously.

Eskom financial director Paul O'Flaherty said almost 60% of the revenue rise was due to the roll-out of its tariff increases. It was 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 warned 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.

  • Chace - 2011-11-23 14:50

    Why is a public service provider making such large profits?

      piet.strydom - 2011-11-23 15:24

      To pay for future expansion.

      DeonL - 2011-11-23 16:11

      This is small in relation to theire debts of R178 billion and soon to be R400 B. Let us hope they pay off some of theire debts or we will have to, again.

  • Maria le Grand - 2011-11-23 15:06

    If they make a profit. why such high tariff increases? Did they tell lies to goverment when trying to justify these tariffs?

      Janneman - 2011-11-23 21:57

      We must not loose sight of the fact that this profits are paper profits only. I have not seen the statements but it would be interesting to see how much of the "profits" are in debtors. Eventually this will be written off as uncollectable and you will have another price increase to pay for the bad debts. This happened before and will happen again!!!

  • Ogre - 2011-11-23 15:07

    Now pump those profits into sustainable systems to provide us with uninterrupted electricity instead of filling the executives' pockets.

  • colonel - 2011-11-23 15:17

    so thats why the rates went up. to pay off your house, ur car, ur childs fancy bmw, ur holiday home, ur life...

      FedUp* - 2011-11-23 16:21

      Yep - an WE end up under debt review! OUR salaries increase 7% - 10% and simply do not cover 25% Eskom increases!

  • TheKnowItAll - 2011-11-23 15:18

    those tariff increases are meant to finance infrastructure development...

  • colonel - 2011-11-23 15:20

    Another corporate ripping off the consumer

  • My Father - 2011-11-23 15:21

    Directors' salary also increased.

  • colonel - 2011-11-23 15:23

    Too cool. Now Eskom board members can give themselves extra large performance bonuses. (And when the money is finish, they can demand another tariff increase from "Joe public")

      Met - 2011-11-23 15:28

      And dont forget, in very competitive market

  • Kevin - 2011-11-23 15:27

    The Eksdom rip off must go down in history as the biggest robbery ever. The whole power debacle is a lie and all the prices ridiculous . Strike for change

      werner.smidt - 2011-11-23 16:01

      If you want to see something really rediculous . . look at what Eskom charges . . and then look at what your municipality charges. In Pretoria, it's R1.16/kWh (up from R0.49/kWh in 2008 by the by). I'm pretty sure Eskom charges R0.55/kWh or something like that.

  • ferreira.charmaine - 2011-11-23 15:33

    The rich will get richer and the poorer will get poorer! Actually quite sickening. They can determine their income and we have to work for peanuts!

  • Geyser.cape - 2011-11-23 15:36

    Keep on looting the helpless public! Why does Eskom sell electricity to large industrial corporations who really do not pay their fair share of taxes at R0.08/Kw?

  • Sisie - 2011-11-23 15:49

    Bonus time again, and once again they will deny it. And then try and convince everyone that no bonuses have been paid out since 2000. But that doesn't take into account the bonuses that the top dogs pay themselves every 6 months. Go to future expansion - oh get real. They would rather increase the prices every 6 months, pay out bonuses for a job well done and then increase the prices again giving everyone some excuse or another, except the real reason - greed - it looks good on paper before they pay themselves increases & bonuses.

      GypseyAnn - 2011-11-23 15:51

      These greedy people must keep in mind that the wheel turns ... sometimes it spins very fast as well!

  • dawiej - 2011-11-23 15:51

    More steal instead of building infrastructure

  • carmen.boxall2 - 2011-11-23 16:14

    All I see is a whole bunch of people complaining. Nothing will ever change unless the people complaining actually get off their backsides and pull together to do something constructive about it!If we are all unhappy and feel robbed then organise a mass gathering/march/protest/petition to try fight this ugly monster.If all we ever do is moan and then "cough up the money", nothing is ever going to change.

      mystae - 2011-11-23 16:39

      I agree with you. But, in a country where there are daily protests / petitions, etc., I think it will have little effect.

      anna - 2011-11-23 20:27

      That is exactly what needs to happen! Unfortunately we do not have the time to do it as we are too busy working for: to put food on the table; to pay the maid (so she can feed her children and grandchildren); to pay the gardener (you don't really need him but you feel bad as his pay supports another hand full of people); to pay security companies (the police do not know how to patrol the suburbs). If we said to hell with it, I am going to protest for a week and forever how long all collapses and many people suffer! Because we care too much about other people, because we are overworked and already a slave to the government we find it challenging to go take time to protest! However we still need to find a way! We need to use our smarts and I believe the way will present itself to us as a people wanting a better life for all of us hard working decent serving people!

      lizards - 2011-11-24 08:02

      Dear Carmen. We will only be able to do something constructive once we have our own represenation in parliament - ie peoples democracy not non-elected Mp's who only toe the party line. Those MP's don't know us as we don't know them. They are put there by the party not voters.

  • Hermann - 2011-11-23 16:18

    Wonderful Eskom, now I will wait patiently to see the Christmas bonuses paid to the top guys.

      lizards - 2011-11-24 07:59

      Again!! How much of this "profit" will go to paying off debts taken on by previous management that was paid exorbitant bonuses for losing money.??

  • mystae - 2011-11-23 16:30

    I'm getting so fed-up with this. I'm amazed that the average citizen hasn't taken to the street in protest. We get bulldozed with insane electricity tariffs, astronomical bank charges and generally high taxes... for what? Everyday there are more and more homeless people everywhere. People are struggling. People are dying because they don't have food - but these idiots just keep pushing up their rates... and there's nothing anyone can do about it because then we lose the 'convenience'. Did you know you already pay a levy as part of the petrol price for roads to be maintained? Why do they want even more money from a tolling system?

  • bfvillet - 2011-11-23 16:34

    thugs these profits will not go to the south african public who have made it possible but to managers who are already paid big salaries corporate creed is at its worst in SA.The hunger for more is shameless and blatant.

  • PetePan - 2011-11-23 21:50

    A few years ago an ANC cadre sold off a fully functional mothballed power station to Canada at scrap metal prices, and kept his job. Today we are paying R100 BILLION to replace that capacity.

      Robert Hurn - 2011-11-23 22:22

      Hear me here comes bonusses - Trust me. The same story over again. Corruption in this country is more predictable than sport.

  • 100003112904997 - 2011-11-24 21:26

    Eskom is supposed to be a state run business, they should not be making profits from us??!!

  • thasmeel.singh - 2012-01-12 13:54

    nice profit so lets see which corrupt anc nut gets a tender awarded to themselves.

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