TechCentral reported on 20 August 2026 that Eskom announced a net profit after tax of R30.3-billion for the year to 31 March 2026, more than double the R14-billion recorded the year before. The utility achieved this while electricity sales fell 6.2% to 178 TWh, a drop that surprised many observers.
The headline figures hide a mix of factors that matter to anyone who pays a power bill, including small-business owners. Eskom’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 10.9% to R108.6-billion, helped by a 12.74% average tariff increase approved by the regulator Nersa. At the same time, net finance costs fell sharply, and losses on foreign-exchange and fair-value adjustments shrank from R10.4-billion to R1.1-billion, a swing of R9.3-billion that accounts for more than half of the profit improvement.
Why the profit surge matters to small businesses
Higher tariffs translate directly into higher electricity costs for retailers, manufacturers and service providers. While Eskom says “tariff increases alone are not the strategy”, the board chairman Mteto Nyati warned that the utility cannot rely on price hikes to cover municipal debt, an ageing fleet and the capital needed for the energy transition. For SMEs, this means a tighter cost environment, especially if load-shedding persists or if municipal arrears trigger supply interruptions.
Municipal arrear debt rose R17-billion to R111.6-billion, and Eskom wrote off R3.6-billion this year with another R4-billion slated for 2027 under a national debt-relief programme. The City of Johannesburg briefly faced a supply cut after breaching its payment arrangement, but settled its arrears in August. Such episodes illustrate the risk of supply disruptions that can halt production lines or force retailers to close temporarily.
Reading a “qualified” audit opinion correctly
The audit of the financial statements, issued by Deloitte, carries a qualified opinion. This is worth explaining precisely, because the term is often misread as meaning the numbers are wrong. A qualified opinion means the auditor could not obtain enough evidence to confirm one specific area of the accounts, in Eskom’s case, whether all irregular expenditure was fully recorded as required under the Public Finance Management Act, while still being satisfied that the rest of the financial statements present a fair view. Irregular expenditure was disclosed at R4.9-billion, down from a restated R10.9-billion, but Deloitte could not determine the full extent of the misstatement. Separately, and more seriously, the audit also notes a material uncertainty about Eskom’s ability to continue as a going concern, given inadequate tariffs, falling sales volumes and high debt service costs, a distinct disclosure from the qualified opinion that speaks to the utility’s longer-term financial viability rather than to the accuracy of this year’s numbers.
On the upside, Eskom is courting new demand. The utility signed concessionary pricing agreements with Samancor Chrome and Glencore-Merafe ferrochrome smelters, and a two-year deal with Manganese Metal Company. It is also expanding wheeling arrangements and preparing for growth in the data-centre sector, which could create opportunities for local IT firms and service providers that support those facilities.
From a financing perspective, the utility’s R80-billion shareholder loan was converted into equity in August, and share capital rose R64-billion to R381.6-billion. Fitch upgraded Eskom’s local-currency rating to B+ in June and Moody’s affirmed its ratings in May, both with stable outlooks. While these upgrades may lower borrowing costs for Eskom, they do not directly reduce the tariffs that small businesses must pay.
Finally, the restructuring of the transmission business continues. President Cyril Ramaphosa endorsed a report that will see an independent transmission system operator own the grid, with safeguards to keep commercial information separate. The board’s three-year term for chairman Nyati ends in October, and it is unclear whether he will be reappointed.
In short, Eskom’s profit surge is less about selling more power and more about price adjustments and a leaner balance sheet. For SMEs, the immediate takeaway is that electricity costs are likely to stay high, and supply reliability remains linked to municipal debt settlements and the outcome of the transmission-system split, a structural reform that will take years to complete regardless of how strong this year’s headline profit number looks.
