National power utility Eskom has demonstrated a significant turnaround in efficiency and management, reporting a second-consecutive year of profits. Its third-quarter financial update for March to December 2025 revealed year-to-date revenue of R273.7 billion, marking a 3.4% increase year-on-year. The full-year forecast projects revenue to reach R355 billion, a 4.1% improvement over 2025. Earnings before interest, taxes, depreciation, and amortisation (EBITDA) are expected to hit R95 billion, with profit before tax anticipated to be slightly higher than in 2025, at R26 billion. Profit after tax is projected to be R2 billion higher than the R16 billion recorded in 2025. Despite these positive financial indicators, tariff increases remain a central, and contentious, aspect of Eskom’s financial narrative.

Political economists Dr. Dale McKinley and Dr. Sam Koma acknowledge Eskom’s improved performance but caution that continued reliance on expensive electricity and state bailouts risks entrenching an unsustainable model. Dr. McKinley posits that tariff increases are the primary driver of Eskom’s profits, noting a staggering rise of over 150% in South Africa’s electricity prices over the past two decades. He states, “We’ve gone from some of the cheapest electricity in the world to some of the most expensive,” attributing this primarily to mismanagement and corruption, which he believes have exacted a heavy price on consumers. McKinley also stresses that local municipalities share responsibility for the difficulties faced by residents and customers, including those relying on prepaid electricity. He argues that proper management and efficient operation of the National Energy Regulator of South Africa (Nersa) and Eskom over the last 20 years, along with a diversified energy mix, could have led to significantly fewer increases and lower prices. He attributes the current situation to corruption, mismanagement, wasteful expenditure, the hollowing out of management capacity, and a decline in technical expertise and plant efficiency.

Dr. Koma concurs with McKinley regarding the significant contribution of tariff increases to Eskom’s improved revenue. He points out that Eskom has faced a weak balance sheet for over a decade, recording massive financial losses and struggling to break even. He cites systemic governance lapses, unsustainable debt, and political pressure against implementing the Nersa-approved tariff increase in 2022 as factors that have rendered electricity costs unbearable and expensive. This, Koma explains, has led many private companies to shut down operations, citing huge energy costs as a major contributing factor. However, Koma also highlights that Eskom’s turnaround strategy has focused on improving electricity generation to curtail excessive load-shedding over the past three years. He also credits the appointment of senior executives with relevant experience and capabilities, along with a stable board, for contributing to the utility’s improved performance.

While acknowledging the steep price of electricity as a global phenomenon, Koma suggests that Eskom’s tariffs compare favorably to those in other middle-income countries similar to South Africa, such as Kenya, which he notes has higher electricity tariffs. Looking ahead, Eskom intends to contain tariff increases by implementing a long-term tariff path, aiming to move away from short-term increases that currently burden households, consumers, and industries dependent on the utility’s electricity distribution.