For South African businesses that rely on cheap, reliable power, Eskom’s bottom line matters as much as the price on the electricity bill. A reported R30.3bn profit for the 2026 financial year suggests a turnaround, but the audit qualification and a series of accounting adjustments mean that the headline figure may not translate into lower tariffs or a stronger balance sheet for the utility.
According to Moneyweb, Eskom’s audited statements show a R30.3bn profit, which the company describes as an operational recovery, a step toward energy security and a sign of financial sustainability. The same statements carry a qualified audit opinion because the auditors could not verify the disclosure of irregular expenditure. A qualified opinion does not mean the numbers are wrong, but it signals that the auditor could not obtain enough evidence to confirm that all material information has been disclosed.
Tax asset write-off and its impact
A deferred tax asset is a future tax benefit that can be used to reduce taxable profit. Eskom recognised a large deferred tax asset in earlier years, assuming it would generate enough profit to absorb R135.7bn of accumulated tax losses. In 2024 the utility removed R36.6bn of that asset, arguing that the separation of its transmission arm into the National Transmission Company of South Africa (NTCSA) meant future profit would be insufficient. The write-off added R29.5bn to the tax charge, turning a R25.5bn loss before tax into a R55bn loss after tax. The question for analysts is whether the forecasts that justified the original asset were realistic at the time they were made.
In 2025 Eskom recorded a R7.3bn impairment charge on financial assets, a write-down that reflects the expected loss on loans and other receivables. By 2026 that charge had fallen to R281m, even though municipal arrears grew by R17bn to R111.6bn. Expected credit loss calculations depend on assumptions about default probability, loss severity and recovery rates. The sharp reduction in the charge suggests that Eskom changed those assumptions, but the audit does not explain what new data drove the shift.
Fair-value swings and finance costs
Roughly two-thirds of the R17.5bn improvement in profit before tax came from items below the operating line. A R9.3bn swing occurred in the net fair-value, foreign-exchange and deferred-income line, mainly because the fair-value loss was smaller than in the prior year. Net finance costs fell by about R2.2bn, helped by government debt-relief support and lower borrowing costs. None of these moves reflect higher electricity sales, but they do improve the headline profit.
The audit also notes that earlier periods were revisited: a 2022 correction to the hedges’ valuation methodology, prior-period errors identified by auditors and a restated 2021 loss. These adjustments indicate that the accounting record required significant reconstruction, though the audit does not label them as fraud.
Diesel payments and physical evidence
Eskom has flagged R41bn of diesel payments as out-of-contract and irregular, R3bn linked to current contracts and R38bn to older contracts. In one case, Eskom’s SAP system recorded receipt of 40m litres, while the terminal operator could only confirm about five million litres in its tanks. Eskom argues that “available” fuel could include stock stored elsewhere or on request, a definition that the audit does not verify. Without matching physical delivery records, the true loss, if any, remains uncertain.
The bottom line for investors, suppliers and small-scale manufacturers is that the profit figure rests on a series of judgments that have not been independently confirmed. If the tax asset write-off, the reduced impairment charge and the diesel irregularities prove larger than currently disclosed, future earnings could be weaker and the utility may need to raise tariffs or seek additional government support. Until the underlying evidence is reconciled, the reported recovery offers limited assurance of lasting financial health.
