While experts concede that national power utility Eskom has made a turnaround in terms of efficiency and management, with its third quarter financial update pointing to a second-consecutive year of profits despite selling less electricity, tariff increases remain central to the story.
Eskom’s year-to-date revenue from March to December 2025 reached R273.7 billion, up 3.4% year-on-year. Its full-year forecast projects revenue of R355bn, a 4.1% improvement on 2025.
EBITDA (earnings before interest, taxes, depreciation and amortisation) is expected to hit R95bn, while profit before tax is anticipated to come in slightly higher than in 2025, at R26bn. Profit after tax is expected to be R2bn higher than the R16bn recorded in 2025.
But while political economists Dr Dale McKinley and Dr Sam Koma told the Mail & Guardian that several factors lay behind Eskom’s improved performance, both warned that expensive electricity and continued state bailouts risked entrenching an unsustainable model.
McKinley said tariff increases were the primary driver of Eskom’s profits, noting that South Africa’s electricity prices had risen by more than 150% over the past two decades.
“We’ve gone from some of the cheapest electricity in the world to some of the most expensive. This has predominantly been due to mismanagement and corruption — largely contributing to a heavy price we have been paying.
“It is not simply Eskom which has made things very difficult for most residents and other customers hit by increases, including those relying on prepaid electricity. Local municipalities should also take full responsibility,” McKinley said.
He said that if the National Energy Regulator of South Africa and Eskom had been properly managed and efficiently run over the past 20 years, “we would have had much fewer increases”.
“Had we also diversified our energy mix over a long period and had planning, we could have brought prices down.
“Among the vast majority of the reasons we are in this situation is because of corruption, mismanagement and wasteful expenditure,” McKinley said.
“We essentially saw the gutting of the management capacity, skills levels, inefficiency of running plants, lack of technical expertise, tenderisation — all the things that have led to the problems.”
The impact of the hollowing out Eskom during state capture was, he said, “tantamount to the running down of the public utility”.
“If your energy utility is being run into the ground, it’s not going to compare well with other countries,” McKinley said.
“There is still too much reliance on tariff increases and public bailouts, with adverse consequences for the taxpayer, who is constantly providing more money.
“Eskom became far too comfortable, relying particularly on coal, state contracts and being bailed out constantly.
“There has been no consequence management being implemented, saying a great deal about Eskom, our political leadership, management and governance of our state-owned enterprises.”
On the implementation of Eskom’s turnaround strategy, which has led to improved profitability, Koma said the plan had focused on improving electricity generation to curtail excessive load-shedding over the past three years.
He also cited the appointment of senior executives with the right experience and capabilities “to turn around the utility, plus a stable board, among others”.
Concurring with McKinley, Koma said Eskom’s improved revenue was largely due to tariff increases. “Admittedly, Eskom has had a weak balance sheet for over 10 years, recording massive financial losses.
“It was not able to break even and make profit. Due to systemic governance lapses, unsustainable debt and political pressure not to implement the Nersa-approved tariff increase in 2022, electricity costs imposed by Eskom have become unbearable and expensive,” Koma said.
He said that “has contributed to many private companies shutting down operations and citing huge energy costs as contributing to their business operations”.
Koma said the steep price of electricity appeared to be “a global phenomenon prevalent across many countries”.
“Comparatively speaking, electricity tariffs imposed by Eskom fare much better than those in middle-income countries similar to South Africa, such as Kenya, which has higher electricity tariffs.
“In fact, Eskom intends to contain tariff increases by ensuring a long-term tariff path, as opposed to operating under short-term tariff increases that burden many households, consumers and industries relying on the utility’s distribution of electricity.”
The national power utility is heading for a second year of profits but experts say tariff hikes and state bailouts remain central to its financial recovery