Eskom Holdings SOC Ltd. said first-half profit increased 22 percent as cash flows improved and the company that’s struggling to meet demand for electricity in South Africa raised power prices.
Net income climbed to 11.3 billion rand ($801 million) in the six months ended Sept. 30, the Johannesburg-based utility said in a statement handed to reporters in Johannesburg Tuesday. Revenue increased 8 percent to 87.9 billion rand even as electricity volumes declined to 107,307 gigawatt-hours, a fourth straight first-half decrease.
The country’s power-supply system was plagued by rolling blackouts in the first half of this year that have curbed mining and manufacturing, both knocked by strikes that limited 2014 growth to the slowest pace since a 2009 recession. While the grid remains tight, Eskom has imposed rolling blackouts only once in the past three months, and will be able to perform maintenance on its aging fleet of plants without having to resort to cuts until at least August, Chief Executive Officer Brian Molefe said last week.
“We are progressing well in the maintenance of our power generating plant whilst keeping the electricity system stable,” Molefe said in Tuesday’s statement.
Primary energy costs, which mainly comprise the coal that the utility burns to generate electricity, climbed 7.7 percent to 41 billion rand, while total operating expenses increased 7 percent to 71.3 billion rand.
The utility that provides about 95 percent of power to the continent’s most industrialized economy has projected cashflow shortfall of 225 billion rand for the five years through March 2018, the result of the energy regulator’s decision to grant the company half of the annual average tariff increase of 16 percent sought for the period. Eskom narrowed the gap to 191 billion rand through cost cutting, and plans to save a further 61.9 billion rand.
~Kevin Crowley [Bloomberg]