By Alexander Winning
JOHANNESBURG (Reuters) -South Africa’s Eskom posted a huge jump in first-half profit on Wednesday, suggesting progress in the utility’s turnaround efforts and prompting it to forecast a much smaller full-year loss.
The 9.2 billion rand ($569.4 million) profit dwarfed a 200 million rand profit a year earlier though the company acknowledged big challenges remain.
State-owned Eskom typically performs much better in the six months to the end of September when tariffs and sales are greater during the southern hemisphere’s winter.
It forecast a net loss for the year through March 2022 of 9.1 billion rand, down sharply from last year’s 18.9 billion.
Already burdened with unsustainable debt levels, its ageing, unreliable coal-powered plants force it to spend large amounts on diesel for back-up generators while its tariffs are not yet cost-reflective.
President Cyril Ramaphosa’s government has been trying to restore Eskom to profitability and improve power plant performance after more than a decade of electricity cuts that have choked economic growth.
Under CEO Andre de Ruyter, Eskom plans to gradually pivot away from coal towards cleaner energy sources, supported by financing from wealthy nations in a deal announced at the COP26 climate summit last month.
Eskom said its gross debt had fallen to 392 billion rand as of September, down 15% from a year earlier, however it expects this to rise to 416 billion by March 2022 because of funding postponed from the previous year.
Government financial support of 21.9 billion rand and 21 billion rand has been committed for 2023 and 2024, it said.
Separately, Eskom has appealed recent decisions by the environment department rejecting requests for exemptions from pollution standards at some of its coal plants.
Eskom said this week the department’s stance could force it to shut down around a third of its generating capacity.
Eskom also said it would lease land to private investors for renewable energy generation.
($1 = 16.1581 rand)
(Reporting by Alexander Winning; editing by Kirsten Donovan and Jason Neely)
