Rows of concrete blocks line a quiet suburb in Gauteng, each meant to become a home but now standing empty and fenced off. According to the Daily Investor, Eskom, South Africa’s power utility, has written off R910 million after completing 366 flats that remain unoccupied.
The figure represents the cost of construction that the utility cannot recover through rent or sales. In accounting terms, a write-off is an expense recorded when an asset is deemed to have no future economic benefit. For Eskom, a company already grappling with a strained cash flow, the loss adds another layer of pressure.
Eskom entered the property market as part of a broader strategy to diversify revenue streams beyond electricity generation. The move was intended to generate steady rental income and to support the government’s housing agenda. However, the abandoned flats illustrate the risk of venturing into sectors where the utility lacks core expertise.
For small contractors and suppliers who may have been involved in the project, the abandonment could mean delayed payments or lost contracts. The construction sector in South Africa has been feeling the squeeze from higher input costs and a shortage of skilled labour, and a high-profile failure such as this may make lenders more cautious about financing similar ventures.
What the loss means for Eskom
Financially, the R910 million write-off will reduce Eskom’s earnings for the current financial year. The utility has been under pressure to meet debt-service obligations while funding the national grid’s upgrade and managing load-shedding schedules. Any additional expense tightens the budget and could affect the timing of planned infrastructure projects.
From a governance perspective, the incident raises questions about project selection and oversight. Critics have long warned that Eskom’s forays into non-core activities distract from its primary mandate of supplying reliable electricity. The abandoned flats may prompt the regulator, the National Energy Regulator of South Africa (NERSA), to scrutinise future diversification plans.
Taxpayers, who ultimately fund Eskom’s operations through electricity tariffs, are the indirect bearers of the loss. While R910 million is a fraction of the utility’s total debt, it is a tangible example of how mis-aligned investments can translate into higher costs for consumers.
Looking ahead, Eskom will need to decide whether to try to lease the flats, sell them, or write them off completely. Each option carries its own set of costs and administrative hurdles. The utility’s next steps will be watched closely by investors, analysts, and the broader business community, all of whom are keen to see whether Eskom can refocus on its core business and avoid further costly diversions.
Why utilities keep making this kind of misstep
Eskom’s housing venture illustrates a pattern that shows up across state-owned utilities more broadly: an entity with a captive revenue base from its core mandate, in this case guaranteed electricity tariff income, can end up cross-subsidising a diversification project that a purely commercial developer would never have greenlit, because the losses are absorbed quietly against a much larger balance sheet rather than forcing an immediate reckoning. That insulation from ordinary market discipline is precisely what allows a project like 366 empty flats to run for years before it surfaces as a headline write-off, rather than being caught and corrected early the way a dedicated property developer’s lender would have forced much sooner.
The broader pattern extends beyond Eskom specifically. State-owned enterprises across multiple sectors, ports, rail, telecoms, have periodically diversified into adjacent property or infrastructure ventures using the justification of supporting a national policy goal, in this case housing delivery, only for the venture to underperform against the commercial discipline a dedicated developer would have applied from the outset. For South African taxpayers and ratepayers, the pattern matters because these losses rarely trigger the kind of consequences a private company’s shareholders would demand, which is part of why they tend to recur across different entities and different decades rather than being corrected once and for all.
