Dissecting Eskom's decline from award-winning utility to billions in bailouts
Key topics:
Eskom’s efficiency and reliability have sharply declined since 2001.
Debt, tariffs, and workforce inefficiency surged despite revenue growth.
Political interference and mismanagement worsened load-shedding crises.
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The decline of Eskom’s operational and financial efficiency is evident when comparing its latest annual results to when it won power company of the year.
Financial Times awarded Eskom the prestigious award to recognise its extensive historical and ongoing work in electrifying South Africa.
At that time, the power utility’s electricity-generating fleet was exceptionally reliable and its tariffs were among the cheapest in the world, supporting solid economic growth.
Just six years later, Eskom would begin tarnishing its reputation with the country’s first national rotational power cuts in decades.
The arrival of load-shedding in 2007 resulted from the South African government failing to heed the warnings of energy experts and Eskom itself that the company would run out of capacity.
Eskom also underwent a major governance change that contributed to its dismal operational and financial performance just a few years earlier.
The Eskom Conversion Act 13 of 2001 converted the power utility from a statutory body into a state-owned enterprise with the government as its sole shareholder.
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Key changes included replacing its two-tier governance structure, which consisted of the Electricity Council and Management Board.
This consisted of the Electricity Council, which comprised 15 diverse individuals, including independent experts, business executives, consumer interest group representatives, and key economic industry leaders.
The council was responsible for Eskom’s broader strategy, based on sound business principles and relying on self-determined guidelines, policy, and objectives.
The council also appointed the management board, which was responsible for day-to-day management.
These include the Eskom CEO and chairman, which was one position, as well as executive directors for generation, transmission, distribution, finance, and human resources.
The act replaced the council with a Board of Directors to guide strategy and a management team for Eskom’s executives.
The intention of the legislation was to make Eskom more efficient and competitive.
However, according to South African History Online, it weakened the utility and stripped Eskom of its prerogatives of autonomy and cheap electricity.
“Engineers’ power was greatly reduced, managers were appointed by cronyism structures, and ‘political entryism’ was applied,” it said.
Skyrocketing debt and tariffs — and reduced employee efficiency
In the past two years, Eskom has achieved marginal operational improvements, enabling it to avoid load-shedding for most of the time.
Despite this, the utility and its board are not yet confident enough in the system to declare an end to load-shedding.
Eskom and the South African government have also made a lot of noise about the power utility’s improved financial performance in the 2025 financial year.
However, both its operational and financial metrics paint a bleak picture when compared to its exceptional performance in 2001.
Eskom’s latest annual profit after tax of R16 billion is 525% greater than the R2.56 billion in 2001. However, this does not reflect true long-term performance gains.
Since load-shedding began, the power utility has recorded cumulative losses running into the hundreds of billions of rands, despite receiving R496 billion in taxpayer bailouts and implementing exorbitant tariff hikes.
Its debt has ballooned to R372.7 billion, compared with R16.7 billion in 2001. At the same time, its debt-to-equity ratio has worsened from 0.18 to 1.45.
Eskom’s revenue has increased substantially. In 2025, it was R340.9 billion, a 1,206% jump over the R26.11 billion recorded in 2001.
However, most of that increase can be attributed to its above-inflation tariff hikes and not an improvement in electricity sales.
Eskom’s electricity sales volumes were just 5.5% higher in 2025 than in 2001, while the average cost of one kilowatt-hour of its electricity has jumped 1,414% from R0.14 to R2.12.
A major contributor to this has been Eskom’s bloated workforce. In 2001, it employed 29,969 staff and sold 6,054 gigawatt-hours of energy per worker.
That declined 25% to 4,513GWh in the last financial year, when it had 42,030 employees. From a different perspective, it now takes 100 Eskom staff to deliver the same amount of power that 75 could.
These factors show that despite Eskom’s recent improvements, many years of corruption, mismanagement, and political interference have caused devastating damage to the power utility.
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It remains to be seen whether it can reverse these effects and truly turn a corner towards long-term stability.
The table below compares key financial and operational performance metrics in Eskom’s 2021 and 2025 financial years.
This article was first published by MyBroadband and is republished with permission