POWERING UP: Ramokgopa sets record straight on Eskom turnaround, buying board time for reforms

Eskom may be celebrating a solid set of financial results, but mounting arrear debt and structural liabilities reveal why full market reform remains a slow, delicate process.

The minister of electricity and energy, Dr Kgosientsho Ramokgopa, is done being apologetic about the good work he and the Eskom ensemble have put in to turn the national power utility around.

In November 2025, during a keynote address in Johannesburg at an event organised by the Black Business Council and the Guma Group, he said:

“We must state it publicly that black professionals are driving the turnaround... We’re exceptionally qualified, competent professionals, patriotic, who have taken the mission of resolving the most existential questions of the South African democracy. That’s what we have achieved. We must stand on the rooftop. We are resolving this problem because we’ve got the means to resolve this problem. The colour of our skin should not define who we are. We are exceptionally confident, and that’s why this Eskom story is incomplete; we are going to deliver more and more...”

Now that those questions have been cleared up, beneath the tidy headline profit of R30.3-billion the power utility announced for the last financial year lies a series of structural liabilities, governance failures and criminal threats that challenge Eskom’s standalone viability.

Municipalities account for 44% of Eskom’s sales, but payment failure remains a systemic threat. Gross municipal arrear debt grew by R17-billion (17.9%) to R111.6-billion at year-end and continued to escalate to R119.9-billion by June 2026.

Outgoing CFO Calib Cassim revealed in his last results presentation that Eskom was forced to exclude R15.8-billion in billed revenue from its income statement due to non-collectability.

Under the National Treasury’s municipal debt relief programme , R3.6-billion was written off during the year, with another R4-billion scheduled for FY2027.

Arrear debt actively blocks the legal separation of the distribution division. Distribution cannot proceed to corporatisation (as the National Electricity Distribution Company of South Africa) because it cannot satisfy the liquidity and solvency tests required for lender consent. Without intervention, municipal arrears are projected to reach R358-billion by FY2031.

A cornerstone of the electricity supply industry reform under the Electricity Regulation Amendment Act is the unbundling of Eskom’s vertically integrated monopoly into focused subsidiaries and the creation of an independent state-owned Transmission System Operator.

The National Transmission Company South Africa (NTCSA) has been operating as a wholly owned subsidiary of Eskom since 1 July 2024. Unpacking the financial statements, however, reveals major costs, accounting challenges and financial risks associated with this split.

The value of Eskom’s investment in NTCSA increased by R4.2-billion (from R26.3-billion in FY2025 to R30.5-billion in FY2026) as a direct result of the NTCSA portion of government debt relief being converted into equity.

Under accounting standards, NTCSA, generation and distribution continue to be classified as a single cash-generating unit.