Eskom was almost 190 000 installations short of its smart meter target for its 2026 financial year, as electricity theft, meter tampering and illegal prepaid tokens continued to cost the utility billions of rand.
The utility, which received a qualified audit over incomplete records of irregular expenditure, successfully turned a profit for the second consecutive year in a row, with net income coming in at R30.3 billion, restated from R14 billion in 2025.
Last year’s profit was revised downwards by R2 billion to account for R980 million in fees owed to the National Revenue Fund and R1 billion in public liability claims against Eskom.
“This is the second consecutive year that Eskom has delivered a profit. That performance was earned through operational recovery and cost discipline. It now allows us to reinvest in Eskom Green, in a better customer experience in distribution, in the reliability of the coal fleet, and in grid expansion so that new generation can connect,” says Eskom chairman Mteto Nyati.
Shaky ground
Despite its improved financial performance, Eskom continues to face material uncertainty over its ability to continue as a going concern, with its finances remaining dependent on government support and new debt. Key risks include declining electricity sales, high debt-servicing costs and escalating municipal arrears.
Municipal debt is still Eskom’s biggest financial threat, as arrears increased 17.9% to R111.6 billion by the end of March, before increasing by a further R300 million by June. Eskom warns this deficit could reach R358 billion by the 2031 financial year “if decisive intervention is not implemented”.
However, the board says Eskom has adequate resources to continue operating and fund its capital programme, while auditors Deloitte note there are measures in place to ensure its continued viability.
Distribution losses – the overall electricity lost across Eskom’s distribution network that includes both technical losses and non-technical losses – worsened slightly, from 10.42% to 10.54%.
Stolen juice
As part of its distribution losses, the utility recorded R6.599 billion in non-technical losses, down from R7.068 billion the previous year, because of electricity theft through illegal connections, people tampering with and bypassing meters, as well as illegal electricity tokens.
Some of these non-technical losses stemmed from a 2024 online vending system compromise, which enabled illicit prepaid electricity tokens to be generated for Eskom and municipalities using its vending platform. Once loaded, these tokens credit customers with electricity without generating any revenue, leaving Eskom to carry the cost of supplying the power.
Eskom says the tokens will continue contributing to non-technical losses. “The potential obligations emanating from the exposure that illicit tokens can be used in the future cannot be reliably measured because of the high level of uncertainty around the completeness of the number of illicit prepaid electricity tokens created, as well as the number of tokens already used,” its report says.
The utility has implemented load reduction to effectively throttle power supply to areas where cable theft, bypassed meters and overloaded infrastructure are a regular occurrence. Once smart meters are installed, these areas are exempt from load reduction.
Counting the cost
Smart meters also allow Eskom to better account for electricity consumption and identify non-technical losses, with data from connected meters used to detect the use of valid and illicit prepaid tokens.
Its annual financial statements for the period show that Eskom aimed to put 800 000 smart meters into people’s homes to improve billing accuracy, reduce electricity theft and non-technical losses, and strengthen revenue collection. It missed this target by 24%.
Eskom previously said that meter conversions have been delayed because “installation teams continue to face persistent resistance, including intimidation, violent incidents and repeated work stoppages”.
Eskom says it will reinvest profit into its capex programme, which is set to grow from R45 billion this year, to more than R70 billion for each 12-month period, taking total capital investment across the group to R343 billion over the next five years, including investment in improving the grid to enable the addition of extra generation and coal fleet reliability.
Part of that investment will also go towards Eskom Green, the utility’s renewable energy business launched in June, as it seeks to accelerate its move into cleaner generation. Eskom has earmarked R9.8 billion for clean energy initiatives.
Eye spy
Eskom also continued to struggle with a backlog of forensic cases dating back to 2020, with just 11.61% of investigations beginning within 60 days, against a target of 80%. While not detailing cases under investigation, it said in its results that high-priority cases will go to the Raptor Fusion Centre, which deals with organised crime, infrastructure sabotage and economic offences.
“We are rebuilding an economic asset for South Africa. We have moved from recovery to transformation, shifting our focus from stabilising the business to building a financially sustainable, competitive and future-ready Eskom,” says Nyati.
“Sustained profitability, significant progress in our audit recovery programme aimed at strengthening internal controls, and improved efficiencies enable Eskom to continue to address electricity affordability with our shareholder, as we aspire to remain within single-digit price increases.”
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