Eskom maintenance to offset R12bn profit

Eskom recorded a profit of R12.24 billion for the six months ended September 30 but this will be eroded by maintenance costs, it said on Thursday.

"The company has indicated, consistent with the seasonality inherent in the sales and maintenance profiles, that this profit will be eroded somewhat in the second half of the financial year," it said in a statement.

Eskom said there was a marginal decline in the first half year profit, compared to the R12.63bn recorded for the same period last year.

Revenue in the first half of the 2013/14 financial year increased by just over six percent to R77.8bn, driven by increased electricity tariffs.

Escalating expenditure, especially due to increased primary energy costs, offset this benefit.

Primary energy costs increased by 25.3 percent, from 22.5 cents a kiloWatt hour (kWh) for the half year to September 2012, to 28.3 cents per kWh for the same period this year.

This was largely due to the 13.3 percent increase in the cost of coal and the use of open cycle gas turbines, the cost of which grew by R2.3bn.

Electricity sales declined by 0.1 percent.

Outgoing CEO Brian Dames said the period had been characterised by "co-operation and resilience".

"Despite a highly constrained system, we've taken significant steps with our partners to avoid rotational load-shedding, and we are addressing the tariff constraints in every aspect of our business."

Revenue per kWh sold increased to 69 cents, from 64.9 cents in the same period last year, and operating costs rose to 55.3 cents, from 47 cents.

About 53,600 homes acquired electricity in the first half of the financial year, up from 32,216 in the same period last year. Since 1991, about 4.4 million homes had been provided with electricity.

Eskom said there was steady progress towards the introduction of new capacity to ease strain on the power grid.

"The extensive programme to return to service previously mothballed power stations has concluded with commissioning of the final unit at Komati," it said.

"The Sere wind farm construction has gained momentum and the first wind turbine has been erected."

The new Medupi power plant was expected to start contributing power in the second half of next year.

Eskom had exceeded its 75 percent target for procurement from broad-based black economic empowerment (B-BBEE) compliant entities.

Out of the total procurement spend of R65.9bn, 87.6 percent or R57.7bn was attributable to B-BBEE.

Dames said Eskom was working on refining its operations in light of the National Energy Regulator of SA's (Nersa) decision to grant it a lower than requested electricity tariff hike earlier this year.

Eskom requested an 18 percent increase, but Nersa granted eight percent for the next five years.

"The gap left by the determination in Eskom's financial plans cannot be closed through efficiency gains alone. Certain strategic trade-offs are being made to ensure we continue to keep the lights on."

The parastatal also announced that its group executive for customer services Tsholofelo Molefe had been appointed as Eskom's new finance director with immediate effect.