Cash Flow Dilemma for Eskom
Eskom’s cash flow outlook remains deeply negative under current conditions. Municipal arrears are forecast to soar toward R300 billion by 2030, while debt servicing, infrastructure decay, and the end of state bailouts compound financial collapse risks.
In the pessimistic scenario, Eskom’s cash flow remains in the red for at least the next decade. Despite showing a nominal profit in FY2025, the utility’s underlying finances remain heavily dependent on state assistance and unsustainable borrowing. Without continued government bailouts, Eskom would have posted an estimated R50 billion loss this year — a figure that underscores its precarious reliance on external fiscal support.
Municipal arrears represent the most acute structural threat. Outstanding municipal debt to Eskom now exceeds R95 billion and is projected to climb toward R300 billion by 2030 as payment compliance continues to deteriorate. Over 80% of municipalities are either financially insolvent or have defaulted on Treasury’s debt relief terms, often diverting electricity revenues to other services or payroll. The result is a chronic erosion of Eskom’s operating income and an escalating dependence on short-term debt.
Alongside arrears, Eskom’s debt-servicing obligations remain crushing. Gross debt stood at approximately R372 billion in March 2025, and interest payments alone absorb a significant share of available cash. Even with modest operational improvements and tariff hikes (12.7% in 2025/26), Eskom’s free cash flow remains negative once capital expenditure, maintenance, and debt repayments are included.
Compounding this is the R380 billion required over the next decade to expand and modernise South Africa’s transmission grid. Without these investments, new renewable projects cannot be connected, and system instability will persist. Simultaneously, Eskom faces a mounting backlog in maintenance and replacement of ageing infrastructure, estimated at tens of billions annually. Deferred maintenance has already caused reliability losses and increased reliance on costly diesel generation, which in turn inflates operational costs and accelerates financial deterioration.
The final blow comes from the government’s stated plan to end bailouts after 2026. If implemented, Eskom will lose the fiscal lifeline that has kept it solvent. Without substantial restructuring, further debt relief, or a radical solution to the municipal arrears crisis, Eskom’s financial recovery remains implausible. By 2030, the utility risks being trapped in a prolonged cycle of debt rollover, infrastructure decay, and cash-flow insolvency — even as demand continues to decline from accelerating private and industrial solar adoption.
Eskom’s deteriorating cash position highlights the urgency for energy independence through solar and hybrid generation. TBG SA continues to deliver high-capacity solar infrastructure and advisory solutions that empower businesses and industries to reduce grid dependence and secure long-term cost stability across South Africa’s evolving energy landscape.
Sources:Eskom FY2025 Results Presentation — www.eskom.co.zaNational Treasury MFMA Circular 124 — www.treasury.gov.zaFitch Ratings Eskom Outlook 2025 — www.fitchratings.comReuters — South Africa’s Eskom Posts R3 Billion Loss after Transmission Split (2024)Moneyweb — Eskom Finally Profitable but Audit Opinion Still Qualified (2025)IOL — Municipal Debt Could Top R300 Billion by 2030SABC News — 87% of Municipalities Fail Debt Relief Conditions (2025)BusinessTech — Eskom Names and Shames Defaulting Municipalities (2025)