Todays Insight
Eskom pledged no double-digit tariffs from 2027. On Friday, Eskom announced R24.3 billion interim profit after tax (H1 FY2026 to Sept 2025), while warning of "predictable long-term tariff path" needs as costs exceed revenue. Revenue rose 4% to R191.3 billion solely from the 12.74% tariff increase effective 1 April 2025, despite a 3% drop in sales volumes to 92.8 TWh. Arrears and theft resulted in R17.5 billion in lost revenue (equivalent to 7.9 TWh of electricity); municipal debt reached R105 billion. The second half of the year is expected to be weaker, with full-year profit projected at around R16 billion.
Wages Guarantee 1.85% Annual Tariff Pressure
Eskom wage bill: R43B/year. If the current negotiations are settled @ 10% (base + medical/housing allowances), this will add R5.3B to Eskom’s current wage bill which will then total R48.3B. Verses R285B expenditure: Eskom will need an annual 1.86% tariff increase annually from 2027 to 2029 just to cover this expense (Depending on current negotiations).
Past hikes averaged 12–15% (2022–2025) to cover operational costs, while the R54 billion revenue “error” under remains unaddressed. Eskom announced a R24.3 billion interim profit (on the same day they reported a that the tariffs remain "inadequate" for sustainability; FY2025 profit masks R94.6B+ arrears (up 27%). WHO is fooling who.
Profit? Tariff Illusion Amid Declining Demand
Eskom is threatening to cut supply to defaulting municipalities, noting that 85% of the 71 participants in its debt relief program have missed current payments. South Africa's unemployment rate of 31.9% in Q3 2025 perpetuates widespread non-payment and theft, affecting approximately 1.7 million Eskom subscribers. Debt relief measures such as grants or write-offs provide only temporary relief, as arrears typically re-emerge within a month. while tariff increases drive Commercial and industrial customers into reducing consumption, improving efficiency, or switching to solar power, which will further erode Eskom's cash flow.
Non-Payment Trap + Weak Economy Persist
Eskom highlights significant doubts about its long-term financial viability, citing high debt levels, dependence on government support, uncertainties in operational performance, and revenue limitations imposed by regulated tariff approvals from NERSA. Amid widespread poverty, chronic non-paying customers are unable or unwilling to settle their bills. Rising electricity tariffs are accelerating the shift to private generation solutions, leaving Eskom with a customer base dominated by higher-risk, lower-income payers and intensifying the cycle of financial pressure.
Key risks:
- "No double-digit" promise fragile; wages embed 1.85%+ hikes.
- R24.3B profit tariff-reliant; warnings signal arrears and sales threats.
- Unemployment/non-payment lock vicious cycle.
- The departure of commercial and industrial customers from Eskom's grid significantly reduces revenue, as they switch to self-generation like solar or cut consumption.
Above-inflation tariff increases and pricing volatility will continue due to Eskom's structural financial challenges.
Strategic move:
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Sources: The Citizen, BusinessTech, Engineering News, Moneyweb, MyBroadband, Statistics South Africa, Department of Treasury, Eskom