Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Redefining f or ab et te rf u tu re INTEGRATED REPORT FOR THE YEAR ENDED 31 MARCH 2024 ESKOM HOLDINGS SOC LTD Integrated report 2024 Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Navigating our report The year in review 1 SIX CAPITALS OUR SUITE OF REPORTS Our suite of reports and approach to reporting 2 The following navigation icons are used to depict As part of our comprehensive 1 4 the six capitals (refer to page 10 for definitions): integrated and financial reporting, our reporting suite for 2024 consists Our finances (financial capital) of the following Who we are and how Our infrastructure (manufactured capital) we create value 4 Governance and ethics 43 Our interaction with the environment (natural capital) Understanding our business 5 Board committee responsibilities 44 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Re d e f n i n g f Performance review Supplementary information or ab Delivering value through our business model 10 Promoting an ethical culture 54 Our people (human capital) et te IR rf u tu Composition of our top leadership 13 re 5 Our role in communities Integrated Considering our operating context 17 (social and relationship capital) report Determining material matters 20 Our know-how (intellectual capital) INTEGRATED REPORT FOR THE YEAR ENDED 31 MARCH 2024 Building effective stakeholder relationships 21 ESKOM HOLDINGS SOC LTD Integrated report 2024 2 Performance review 58 TURNAROUND OBJECTIVES Condensed annual financial statements 59 Redefning for Operations recovery ab OR e Our finances 63 tt AFS er Leadership reports 23 fu t ure Our infrastructure 70 FR Financial recovery Annual financial Our interaction with the environment 83 statements Message from the Chairman 24 Our people 93 PCE People, culture and ethics Chief Executive’s review 26 Our role in communities 100 ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2024 Chief Financial Officer’s commentary 30 LS Legal separation 3 6 PERFORMANCE INDICATORS Redefning for ab e tt er SR S  upplementary fu t ure Our strategic and risk Throughout this integrated report, performance Sustainability landscape 33 information 105 against target is indicated as follows: report Actual performance met or exceeded target SUSTAINABILITY REPORT FOR THE YEAR ENDED 31 MARCH 2024 Abbreviations and glossary of terms 105 Our strategy and turnaround plan 34 Actual performance almost met target Leadership qualifications and directorships 109 (within a 5% threshold) Integrating risk and resilience 39 Statistical tables: technical and non-technical 113 Actual performance did not meet target Plant and customer information 118 SC Environmental implications of using or saving electricity 122 Indicates that a key performance indicator is included in our annual compact with the Sustainability indicators selected for reasonable assurance 123 shareholder Independent sustainability assurance report 126 To complete a short Disclosure of information under the PFMA 128 survey on our reports, ADDITIONAL CONTENT please click here Expansions and deviations reported to National Treasury 134 Company information 137 Information block or case study Information available online Please use the tabs at the top of this report as well as the buttons to navigate digitally Return to contents page   Previous page   Next page   Return to previous view Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information The year in review Below we set out performance for the year (with targets and comparatives) on several key ratios, together with other notable developments Plant availability continued to Loadshedding on Spend on Eskom and Particulate emissions at Specific water consumption at deteriorate to IPP OCGTs increased to 329 days 0.79kg/MWh 1.43ℓ/kWh 329 days 54.56% partly due to three Kusile units being R33.9 billion sent out continued to deteriorate sent out increased slightly off lower with average plant unavailability unavailable for six months to mitigate loadshedding 2024 0.79 coal-fired production over 15 500MW for the year 2024 329 2024 33.9 Target 0.30 2024 1.43 Target 261 Target 27.7 2023 0.70 Target 1.38 2024 54.56 2023 280 2023 29.6 2022 0.34 2023 1.39 Target 65.00 2022 65 2022 14.7 2022 1.45 2023 56.03 2022 62.02 Kusile Unit 5 System minutes lost of SAIDI of LTIR of Headcount increased to synchronised 3.29 minutes 34.9 hours 0.29 40 625 to the grid on recovered to within showed slight improvement, showed a decline, supplemented 31 December 2023, delayed by a year expected levels remaining well within target but remained within target by the appointment due to a fire in September 2022 2024 3.29 2024 34.9 2024 0.29 of 519 YES learners Target 3.53 Target Target 0.30 38.0 2024 40 625 2023 4.71 2023 2023 0.26 35.5 Target 42 952 2022 2.88 2022 2022 0.24 35.5 2023 39 601 2022 40 421 Loss before tax reduced to R76 billion Arrear municipal debt escalated to Dan Marokane Suspensive conditions met for legal separation of R25.5 billion received under Government’s three- R74.4 billion appointed as permanent GCE after Transmission business to on the back of an 18.65% year debt relief programme to meet despite introduction of the municipal a year-long recruitment process NTCSA tariff increase debt service outflows of R89.8 billion debt relief programme 2024 25.5 2024 74.4 Target 18.4 2023 58.5 2023 34.6 2022 44.8 2022 15.2 1 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our suite of reports and approach to reporting OUR REPORTING SUITE Our 2024 reporting suite covers the financial year ended 31 March 2024. The reports were approved on 18 December 2024 and can be accessed at www.eskom.co.za/investors/integrated-results/ Our suite of reports comprises the integrated report, annual financial statements and sustainability report. Each of these reports is prepared for a specific audience and serves a particular purpose. Various frameworks and regulations are applied in the preparation of these reports, and each is subject to certain materiality considerations. Finally, the reports are subject to various levels of assurance. The particulars of each report is set out below. What it covers Frameworks applied Materiality Assurance INTEGRATED REPORT The integrated report is prepared in accordance with the Integrated In accordance with the Integrated Reporting We apply combined assurance to the content in the Our integrated report aims to provide a holistic account of how we create Reporting Framework, issued in January 2021 by the International Framework, we believe in providing a balanced, integrated report. and preserve value, our strategy, risks and opportunities, performance and Integrated Reporting Council, which later merged with the transparent and complete account of our performance, outlook, as well as governance of these areas. Supplementary information is Sustainability Accounting Standards Board to form the Value Reporting by focusing on matters material to our ability to create Eskom’s Internal Audit Department provided included at the back of the report. Foundation, which was then consolidated into the IFRS Foundation. or preserve value, or to limit the erosion of value reasonable assurance of quantitative information over the short, medium and long term. We apply the (other than financial information subject to external It is a holistic report to stakeholders covering all our areas of our value The content is further guided by legal and regulatory requirements, concept of double materiality in the integrated report, audit) in the report. creation journey and is aimed predominantly at providers of financial capital such as the Companies Act, 2008 and the King IV Report on in other words, by considering both those external – lenders, bondholders and other investors, as well as the shareholder, Corporate GovernanceTM for South Africa, 20161 (King IV) as well as matters that may have an impact on our financial The group’s independent external auditors, Deloitte representing the people of South Africa. Nevertheless, the report aims to global best practice. Certain disclosures required under regulations results (financial materiality), as well as those internal & Touche, were engaged to provide reasonable provide information to a wide range of stakeholders. issued by National Treasury relating to the disclosure of information matters that have an impact on the outside world assurance on selected key performance indictors under the Public Finance Management Act, 1999 (PFMA), are also (impact materiality). We also consider qualitative (KPIs) disclosed in the integrated report. All but one of The report considers our performance in the context of our internal covered in the report. and quantitative matters material to our operations the 40 KPIs scoped for reasonable assurance received framework that covers environmental, social and governance (ESG) and our turnaround and strategic objectives, as well an unqualified opinion. practices. In June 2023, the International Sustainability Standards Board (ISSB) as strategic risks and opportunities. issued IFRS® Sustainability Disclosure Standards S1 and S2 which The list of KPIs subject to reasonable assurance by the cover the general requirements for sustainability-related disclosures external auditors are set out from page 123 of this and climate-related disclosures respectively. These standards may be report. Deloitte & Touche’s independent sustainability implemented for financial years beginning on or after 1 January 2024, assurance report is included from page 126. subject to certain transitional provisions and adoption by local regulators. We are in the process of assessing the impact of these standards on our future reporting. ANNUAL FINANCIAL STATEMENTS The consolidated and separate financial statements have been The financial statements have been prepared with The consolidated and separate financial statements The consolidated and separate annual financial statements set out the prepared in accordance with IFRS® Accounting Standards as issued reference to financial materiality. Information is have been audited by Deloitte & Touche, who issued financial performance of the Eskom group and company. It includes the by the International Accounting Standards Board (IASB) as well as the material if omitting, misstating or obscuring it could a qualified opinion relating to the quantification and directors’ report and a report by the Audit and Risk Committee, as well as requirements of the PFMA and the Companies Act. reasonably be expected to influence the decisions disclosure of information required in terms of the statements covering the financial position at year end, and the profit and that the primary users of general purpose financial PFMA. Except for this qualification, the financial loss, changes in equity and cash flows for the year ended 31 March 2024, statements make on the basis of the entity’s financial statements are considered to be fairly presented in together with detailed notes. Events subsequent to the reporting date are statements. terms of IFRS Accounting Standards. Furthermore, also covered, together with an assessment of the impact of new standards the independent auditors have emphasised a number and interpretations affecting financial reporting requirements. of matters in their report, including a material uncertainty relating to Eskom’s ability to continue as a It is aimed at a broad range of stakeholders, including the shareholder and going concern. However, these matters do not affect other investors, creditors, regulators, analysts, employees and the general their opinion. public. The financial statements intend to provide a fair and comprehensive view of the group and company’s financial position, performance and cash The independent auditor’s report is included in the flows, to provide decision-useful information to users and ensure transparency financial statements. and comparability across different reporting periods and entities SUSTAINABILITY REPORT The sustainability report is guided by the reporting principles of the Matters dealt with in the sustainability report are The Internal Audit Department provided reasonable Eskom’s sustainability report supplements and provides more detailed Global Reporting Initiative (GRI) and also considers our contribution based on impact materiality, being those matters that assurance on quantitative information and certain information than the integrated report on our sustainable development impacts. to the United Nations’ Sustainable Development Goals (SDGs). It represent the organisation’s most significant impacts qualitative aspects of the report. includes disclosures based on the recommendations by the Task Force on the economy, environment and people. The report is aimed at a wide range of stakeholders with an interest in on Climate-related Financial Disclosures (TCFD), which have now been Eskom’s sustainability impacts. incorporated into IFRS S2 Climate-related Disclosures. We have established an internal framework that covers our ESG practices by setting out the material ESG risks and opportunities we face and the governance structures that provide oversight on the plans in places to address these. We measure our performance through targeted metrics. 1. Copyright and trademarks are owned by the Institute of Directors in South Africa NPC and all of its rights are reserved. 2 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our suite of reports and approach to reporting continued OUR APPROACH TO INTEGRATED REPORTING PREPARATION PROCESS At its core, integrated reporting is based on integrated thinking The integrated report, including supplementary information, is BOARD APPROVAL – looking at the business as a whole and considering the trade- produced by a team from the Group Finance Division, under The Board has considered the integrated report and is satisfied that it has been offs between different areas, without focusing exclusively on the supervision of our Group Chief Financial Officer, Mr Calib prepared in accordance with the Integrated Reporting Framework and adequately financial performance. Cassim CA(SA). This team relies on representatives from areas identifies Eskom’s material matters. Taking into account the reliability of information across the business to supply the information presented. presented and the completeness of material items addressed in the report, and REPORTING PERIOD based on the combined assurance process followed, the Board approved the 2024 This integrated report reviews our financial, operational, On a quarterly basis, Eskom is required to submit a report to integrated report and supplementary information on 18 December 2024. environmental, social and governance performance for the our shareholder, based on National Treasury regulations and most recent financial year from 1 April 2023 to 31 March 2024, reporting guidelines applicable to state-owned companies and considers the outlook for the future where appropriate. (SOCs). The shareholder report discusses performance against Unless otherwise stated, both financial and non-financial the shareholder compact, and also covers financial, operational, performance data in this report relates to the 2024 financial governance and restructuring matters required by the Eskom year. Significant events to 18 December 2024, being the date Debt Relief Act, 2023 as amended. The quarterly shareholder that the Board approved the report, have been included. report forms a key input into the integrated report, together with Eskom’s strategic Corporate Plan which is submitted to Dr Mteto Nyati Dan Marokane Calib Cassim We connect our reliance and impact on the six capitals to our our shareholder annually. Chairman of the Board Group Chief Executive Group Chief Financial Officer identified material matters, strategy, organisational and strategic risks, performance and KPIs through our short-term turnaround Technical, financial and other KPIs reported in this report are and longer-term strategic objectives. In this report, short term based on internally developed measure specification documents means within one year after year end, medium term within one to which set out the measurement criteria. Financial figures are five years, and long term more than five years. Accordingly, when sourced from the group annual financial statements, prepared Fathima Gany Lwazi Goqwana Clive le Roux reporting on KPIs in this report, we have included the short-term in accordance with IFRS Accounting Standards. targets for the 2025 financial year, as well as the medium-term targets for the 2027 financial year. Where applicable, we disclose The content of the integrated report is influenced by the the targets agreed in the annual compact with the department material matters determined during the preparation process. representing the South African Government as our shareholder. The content of the report is reviewed by subject matter experts from the business, as well as executives and Board members. Ayanda Mafuleka Leslie Mkhabela Dr Tsakani Mthombeni  ur assessment of the six capitals is covered on page 10 IR O IR Our materiality determination process and the resulting material REPORTING BOUNDARY AND COMPARABILITY matters are covered from page 20 The report covers the group performance of Eskom Holdings SOC Ltd (Eskom) and its major operating subsidiaries, and The Audit and Risk Committee and the Social, Ethics and Bheki Ntshalintshali Tryphosa Ramano Dr Busisiwe Vilakazi where appropriate, the risks, opportunities and outcomes Sustainability Committee formally recommend the integrated related to our interaction with external stakeholders. report for approval by the Board. By approving the integrated Information presented is comparable to that of prior years, report, the Board assumes ultimate accountability for the unless otherwise stated. Although the integrated report content, completeness and reliability of the report. contains a set of condensed financial statements, it should be read in conjunction with the financial statements, for a Dr Claudelle von Eck We are a proud supporter member of complete overview of the group’s financial performance. Financial information in the integrated report is presented in South African Rand, Eskom’s functional and presentation currency. 3 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Who we are and how we create value Understanding our business 5 Delivering value through our business model 10 Composition of our top leadership 13 Considering our operating context 17 Determining material matters 20 Building effective stakeholder relationships 21 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Understanding our business WHO WE ARE through our reliance on Government financial support. This impacts the We also play a developmental role in the country. As required by Eskom is South Africa’s national electricity utility, and our operations Sovereign credit rating and cost of borrowings, ultimately affecting the Government, we support the National Development Plan 2030 (NDP) span the length and breadth of the country. Given our mandate, we have funds available for other Government programmes. To comprehensively through job creation and transformation of our workforce, economic and a considerable positive impact on the economy and the everyday lives skills development, broad-based black economic empowerment (B-BBEE) address our financial sustainability and limit our reliance on Government and other national initiatives. Our activities also support several United of all South Africans. However, we acknowledge the negative impact on our customers and the country when we can’t execute our mandate support, we require a cost-reflective tariff and a solution to the systemic Nations Sustainable Development Goals (SDGs). by implementing loadshedding and load curtailment, as well as through municipal arrear debt challenge – debt relief alone will not return us to We interact with a diverse range of stakeholders, such as our the burden we create on the fiscus and by extension, the taxpayer, financial sustainability. shareholder, represented during the year under review by the Department of Public Enterprises (DPE), as well as lenders, investors, employees, customers, suppliers, regulators, civil society and other areas ESKOM’S MANDATE TURNAROUND OBJECTIVES of Government. Subsequent changes to our shareholder representative We are tasked by our shareholder to provide electricity in an are discussed later in this section. efficient and sustainable manner. This should assist in lowering the FR Financial recovery OR Operations recovery cost of doing business in South Africa and enable economic growth. IR Our business model sets out how we transform various inputs into We also support Government’s developmental objectives PCE People, culture and ethics LS Legal separation electricity supplied to customers, and it considers the impact of our business on the six capitals. It is set out from page 10 OUR VISION Sustainable power for a better future STRATEGIC OBJECTIVES OVERVIEW OF THE GROUP OUR MISSION S1 Fix the current business S3 Prepare for competition Eskom Holdings SOC Ltd heads up the group, with a head office in Johannesburg and administrative offices in most major centres. The 1 Turn around the existing business and improve financial and Eskom group comprises the holding company with its subsidiaries and operational sustainability S2 Leverage technology S4 Transition responsibly joint ventures. The holding company houses most of the electricity 2 Create a sustainable Eskom that drives economic growth by business and holds investments in subsidiaries, and certain subsidiaries providing electricity reliably and efficiently provide strategic services to Eskom and its employees. The business SIX CAPITALS 3 Make a positive social impact by enabling shared growth housed in the Eskom holding company is by far the biggest contributor to group performance. Financial capital Manufactured capital Eskom is one of the last remaining vertically integrated utilities in the Natural capital Human capital world. However, we are transforming the structure in response to the KEY BOARD FOCUS AREAS Roadmap for Eskom in a Reformed Electricity Supply Industry (Government’s B1 Stabilising the leadership team and building a leadership Social and relationship capital Intellectual capital Roadmap) released by DPE in October 2019. The legal separation process will result in the creation of three independent subsidiaries. pipeline B2 Turning around operational performance to reduce and, KEY STAKEHOLDERS WE IMPACT The legal separation of Eskom is an important step forward in creating ultimately, end loadshedding an independent Transmission System Operator that will enable more B3 Strengthening the balance sheet Business and suppliers Employees investment in the generation sector by enabling connection to the grid and reduce the risk associated with one company being responsible for B4 Executing the legal separation and securing Eskom’s rightful General public and media Investors almost all the electricity generation needs of the country. While the exact place in the changing electricity supply industry form of the Transmission System Operator is being finalised, the National B5 Fighting crime, fraud and corruption Customers Regulators Transmission Company South Africa SOC Ltd (NTCSA) will fulfil this role in the interim. The legal separation process is also intended to improve B6 Reconnecting with stakeholders Government and parliamentary committees transparency and management focus and accountability by treating each of these businesses as standalone entities into the future. OUR VALUES = ZIISCE AFS S egment disclosure for Generation, Transmission, Distribution and Zero Harm protecting the Eskom way Integrity acting the Eskom way Innovation thinking the Eskom way other segments is provided in note 7 of the consolidated annual financial statements Sinobuntu caring the Eskom way Customer satisfaction serving the Eskom way Excellence working the Eskom way 5 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Understanding our business continued NTCSA was set up to house the transmission business. This milestone marks NTCSA’s establishment as a duly constituted and The duration of the lender consent phase (initially estimated at The operationalisation of NTCSA has been delayed due to several distinct wholly owned subsidiary of Eskom. It is a key milestone in the about 18 months) will be extended, given the expectation that key policy and regulatory dependencies. execution of Eskom’s turnaround plan, and a significant step in delivering the lender engagement for Distribution will be more complex against Government’s Roadmap to transform the electricity supply than the Transmission process. This is mainly due to non-payment All three licences required by NTCSA to trade have been granted industry. of municipal arrear debt which impacts the financial sustainability by the National Energy Regulator of South Africa (NERSA). The of NEDCSA. The Distribution board has recommended that the buyer role assignment, cost recovery letter and amendment of Independent non-executive directors were appointed to the NTCSA solution to the payment shortfall because of the municipal debt independent power producer (IPP) generation licences were board from 1 February 2024 and have met several times for induction be elevated to the relevant intergovernmental structures and approved by NERSA by March 2024. The relevant power supply and meetings. The NTCSA board oversees the activities and affairs incorporated into the timeline assumptions. The project timelines and power purchase agreements with Distribution and Generation of the company, and reports to the Eskom Board as its shareholder will be revised to incorporate the deferral of the signing of the have been signed. All lender consents have been received, and representative. NTCSA’s board committees are in place and fully merger agreement and the extended lender engagement time 119 contracts with IPPs have been transferred to NTCSA. functional. allocation. Consequently, the suspensive conditions to effect the merger and The National Electricity Distribution Company South Africa SOC Ltd Options are being considered for the future of the generation subscription agreements were met by 31 March 2024, resulting in (NEDCSA) was registered to house the distribution business, but business, with the timing of the establishment of the company being the disposal of the relevant transmission and other related assets the separation process has also suffered delays due to key external dependent on legislation and Government policy. The current focus to NTCSA. Transmission employees were transferred to NTCSA dependencies, with some dependency on progress in the NTCSA for the Generation business is finalising the remaining power purchase under the same employment contract and with the same conditions separation. Corporatisation and, consequently, the licence application and agreements, ringfencing all aspects of Generation from Corporate, of employment as they had with Eskom. lender engagement have been delayed allowing the publication of Eskom’s and developing a future-fit Generation operating model and structure annual financial statements for the year ended 31 March 2024 prior to that incorporates its clean energy business portfolio. The entity commenced trade on 1 July 2024 on the legal initiating the lender engagement process. The final submission of the implementation date of the merger agreement, after the transfer of NEDCSA licence application to NERSA as well as the lender engagement people and systems from Eskom’s Transmission Division to NTCSA. process will commence after signature of the merger and subscription agreements. Other than NTCSA, Eskom’s major subsidiaries are: Each of the subsidiaries has a board of directors which reports to the Supply = Eskom + IPPs + imports  Eskom Enterprises SOC Ltd (EE) is an investment holding company. Eskom Board. Its main operating subsidiary, Eskom Rotek Industries SOC Ltd (ERI), Demand = local & international customers + technical & non- provides technical support to the electricity business, including AFS F ull details of Eskom’s equity-accounted investees and subsidiaries technical energy losses lifecycle and plant maintenance services. at 31 March 2024 are set out in notes 11 and 12 of the consolidated annual financial statements Our System Operator balances the supply and demand of electricity  Escap SOC Ltd is a wholly owned insurance captive company. in real time to maintain the integrity of the national power grid, by It manages and insures the business risk of Eskom and its subsidiaries. WHAT WE DO maintaining the frequency of the power system at 50Hz.  Eskom Finance Company SOC Ltd (EFC) provides housing and We create and preserve value through the generation, transmission, We operate a transmission and distribution network consisting of just other loans to employees. The process to dispose of EFC, which distribution, purchase and sale of electricity. over 409 000km of high-, medium- and low-voltage power lines. Under is mandated by the shareholder, is expected to be completed Eskom owns and operates most of the base-load and peaking generation the Transmission Development Plan (TDP), a priority programme will during the 2025 calendar year following PFMA and other regulatory capacity in South Africa. We own 30 power stations with a nominal enable grid connection of 37GW of new generation capacity, mostly from approvals, after the Board accepted an offer from African Bank in capacity of 46 788MW which generate electricity by transforming inputs IPPs, with most of the capacity targeted in the Western Cape (12GW), October 2024. from the natural environment, such as coal, fuel oil, diesel, nuclear fuel Eastern Cape (7GW), Northern Cape (6GW) and Mpumalanga (5GW).  The Eskom Development Foundation NPC (the Foundation) is and water into energy. Power is also purchased from IPPs and imported a non-profit company under section 21 of the Companies Act, from cross-border suppliers in several countries in the region.  e provide detailed information on our power stations, power lines and IR W 2008. It implements Eskom’s corporate social investment (CSI) substation capacities from page 118 programmes, aimed at improving the quality of life of communities where we operate. 6 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Understanding our business continued IPPs account for 7 495MW of capacity in total and supplement the Energy breakdown by supplier, % Energy breakdown by destination, % The supply and demand of electricity is depicted below. country’s generation capacity, mainly in the form of wind and solar photovoltaic (PV) power, with some non-renewable sources. The 4 11 Source, GWh 2024 2023 2022 energy supplied by renewable IPPs is not dispatchable, which means 10 5 Coal-fired stations 166 606 171 131 184 568 that we cannot decide when and how much energy is generated. Nuclear power 8 172 9 803 12 355 At times, this puts considerable strain on our own plant, as we Pumped storage stations 4 386 4 081 4 743 often need to either cut back on our own generation when there Hydro stations 1 448 3 060 1 943 is an oversupply by renewable IPPs, or make up the shortfall if IPPs Open-cycle gas turbines (OCGTs) 3 018 1 826 3 634 don’t supply as expected due to unfavourable weather conditions. Wind 329 214 253 Unfortunately, output from our plant can only be reduced to a certain point, otherwise the boiler becomes unstable, but units Eskom generation 184 576 191 307 205 688 can’t be shut down and started up again at short notice – at this Pumping by pumped storage stations (5 710) (5 504) (6 434) level, units are effectively idling at about 60% capacity to maintain Net sent out by Eskom 178 866 185 803 199 254 boiler stability. 86 84 Independent power producers (IPPs) 20 183 17 957 15 973 Eskom IPPs Imports Local sales International sales Imports 8 654 8 500 During the year, we had to rely extensively on the use of expensive 9 150 Eskom-owned and IPP open-cycle gas turbines (OCGTs) and Technical and other losses Wheeling1 2 449 2 904 2 499 frequently had to implement loadshedding due to an overall shortage Energy available for distribution 210 648 215 318 226 226 of generation capacity. This was caused by: Technical and other losses2 (23 502) (23 879) (24 811) • Poor Eskom generation plant performance (shortfall of about Overall capacity by Eskom and Total energy supplied by Eskom and Internal use (345) (516) (329) 1.7TWh for the year) IPPs, by source, % IPPs, by source (net of pumping and Wheeling1 (2 449) (2 904) (2 499) • Delays in renewable IPP programmes that have not yet delivered excluding wheeling), % Unaccounted3 (1 057) 211 (119) capacity in line with Government’s outlook in the IRP 2019 5.1 3.4 3.1 2.5 Local and international sales 183 311 188 401 198 281 (shortfall of about 1.4TWh) 3.9 • Delays in short-term and risk mitigation IPP programmes – which 6.2 4.5 Additional information are required to augment our inadequate capacity – that have not 0.6 5.6 0.5 Estimated loadshedding and load 6.3 13 215 13 476 1 605 come online as we had expected (shortfall of about 7.4TWh) curtailment4 • Lower-than-budgeted power imports (shortfall of about Percentage of demand not met4 5.92% 5.91% 0.71% 6.3 1.6TWh) 54 283MW 208 199GWh 1. Wheeling refers to the movement of electricity between international customers through Eskom’s network, without the power being available to customers on the Electricity is sold mainly to customers in South Africa, with South African grid. some exports to the region, although the extent of exports 2. Technical losses include energy losses incurred during the transmission and has diminished due to supply constraints over recent years. distribution process. Non-technical losses are due to electricity theft through illegal Mozambique is our most significant trading partner for both 72 80 connections, meter tampering and the use of illegal electricity tokens on prepaid meters, as well as meter reading and billing errors. imports and exports. Coal Wind Diesel Hydro Solar Nuclear Other 3. The unaccounted figure, which is in essence a balancing figure, arises due to different cut-off dates for recording information relating to sales and production. 4. This is an estimate by the System Operator of the sales lost and demand not met IR T he number of customers, with sales volumes and revenue by due to loadshedding and load curtailment, based on forecast versus actual demand customer segment are shown on page 121 at a given time. It does not take account of load shifting in response to loadshedding patterns. The Southern African Power Pool (SAPP) forms an interconnected grid, supporting grid stability in the region. The SAPP relies on sufficient and reliable transmission grids in neighbouring countries to facilitate the transmission of electricity throughout southern Africa. 7 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Understanding our business continued HOW WE ARE REGULATED AND GOVERNED ESKOM HOLDINGS SOC LTD Board of Directors Exco and Committees REGULATORS Audit and Risk Capital NERSA Business Operations Performance Information and Technology SUBSIDIARIES National Nuclear Regulator Governance and Strategy Nuclear Management Human Capital and Remuneration Operating National Transmission Company South Africa SOC Ltd Investment and Finance Regulation, Policy and Economics Divisional (trading since 1 July 2024) Social, Ethics and Sustainability Risk and Sustainability boards Tender Eskom Enterprises SOC Ltd SHAREHOLDER AND POLICY Turnaround MINISTRY Eskom Rotek Industries SOC Ltd Department of Electricity and Energy Line divisions Escap SOC Ltd Generation Distribution Transmission Eskom Finance Company SOC Ltd Eskom Development Foundation NPC OVERSIGHT MINISTRIES Strategic functions Strategy & Planning Risk and Sustainability RT&D Internal Audit National Electricity Distribution Company South Africa National Treasury Group Investigation & Security Company Secretariat SOC Ltd (not trading) Department of Forestry, Fisheries and the Environment Department of Water and Sanitation Support functions Finance Human Resources Procurement Legal & Compliance Group Information Technology Government & Regulatory Affairs EXTERNALLY  National Treasury, the Department of Forestry, Fisheries and the accordance with the Electricity Pricing Policy. After year end, Parliament Eskom Holdings is wholly owned by the South African Government. Environment (DFFE) and the Department of Water and Sanitation passed an amendment to the Electricity Regulation Act, to cater for Previously, DPE acted as our shareholder ministry, setting our mandate (DWS) oversee aspects of our activities and ensure compliance with the separation of Eskom and the creation of an independent electricity and overseeing our performance. Since the formation of South Africa’s various regulations. market. Government of National Unity in June 2024, followed by changes to the structure of governmental departments, Eskom is now overseen by the  The former Department of Mineral Resources and Energy (DMRE) Our nuclear power station, Koeberg, is overseen by the National Nuclear Department of Electricity and Energy (DEE). was responsible for setting the country’s energy policy, which is Regulator (NNR), to ensure that Koeberg complies with nuclear safety contained in the country’s Integrated Resource Plan (IRP), with standards to protect individuals, society and the environment against Dr Kgosientsho Ramokgopa was appointed as Minister of Electricity IRP 2019 being the latest approved plan. A revised draft IRP was radiological hazards linked to the use of nuclear technology. in March 2023 to focus on solving the energy crisis, by overseeing the issued early in 2023. Since June 2024, energy has been removed electricity crisis response under South Africa’s Energy Action Plan. Since from this portfolio. Under the PFMA, we are required to submit a strategic Corporate Plan June 2024, energy has been added to his portfolio. to the shareholder and National Treasury on an annual basis, which sets On the operations side, the electricity supply industry is regulated out our strategic objectives, backed by organisational and divisional plans We are also subject to oversight or regulation by several other by the NERSA under the National Energy Regulatory Act, 2004 and and targets to achieve those. The latest plan approved by the Board in Government departments, Parliamentary committees and regulators. the Electricity Regulation Act, 2006, by providing licences, regulatory March 2024 covers the five-year period to 2029. rules, codes and guidelines. NERSA determines our allowed revenue in 8 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Understanding our business continued On an annual basis, we also agree on a compact with our shareholder, Clear accountability for decision-making is assigned through our The Executive Management Committee (Exco) is accountable for to track the KPIs that support our mandate and the strategic objectives delegation of authority policy (DoA) and significance and materiality exercising executive control over day-to-day operations and to execute set out by the shareholder’s Strategic Intent Statement for Eskom. framework (SMF), which guide the referral of matters from management the strategy approved by the Board. Performance against the shareholder compact is reported to the to the Board, and from there to the shareholder and National Treasury, shareholder and National Treasury in the quarterly shareholder report. where required by law. The DoA applies to Eskom as well as its  efer to pages 13 to 16 for the composition of the Board and Exco IR R subsidiaries. The DoA was reviewed during the year and a revised policy The Corporate Plan, shareholder compact and quarterly shareholder was implemented with effect from 1 June 2024, to improve role clarity report are approved by Eskom’s Board prior to submission to the between the shareholder, the Board and management, as well as support Divisional boards for Generation and Distribution serve as transitional shareholder. changes arising from Eskom’s legal separation. structures towards Eskom’s legal separation and drive separate accountability for each division. Although the divisional boards function IR Performance against the 2024 shareholder compact is set out in the The Board, supported by several committees, is the focal point of relatively independently, they report to Exco to ensure that decision- directors’ report in the financial statements. Throughout tables in the our governance framework. It is accountable to the shareholder for making is aligned with Eskom’s overall strategy. The divisional boards do integrated report, KPIs contained in the shareholder compact are denoted performance against financial, operational and other business expectations. not constitute a board of directors in accordance with the Companies using SC . Where relevant, these KPIs are also included in the statistical Furthermore, the Board is responsible for providing strategic direction to Act, 2008, but function as operational boards until the legal separation tables, available at the back of this report, on pages 113 to 117 the organisation and ensuring its sustainability and prosperity. of each division is concluded. Once separated, the boards of the wholly owned subsidiaries will still be accountable to the Eskom Board, in line with good corporate governance practices. Eskom is subject to numerous laws and regulations, including conditions relating to tariffs, environmental duty of care, procurement and human resources. Our licensing conditions place limits on plant emissions and responsible use of water to limit our environmental impact. INTERNALLY Eskom’s approach to governance is based on continuously improving and entrenching good corporate governance practices across the group, to enable the Board and management to exercise their fiduciary duties through effective oversight and quality decision-making. In the spirit of good corporate governance, we strive to apply the principles and practices of King IV. Did you know? We conduct an annual assessment of our application of King IV. The latest application register is available at www.eskom.co.za/about-eskom/leadership/ The wholly owned subsidiaries of the group are governed by a subsidiary governance framework. Considering Eskom’s legal separation process, the Board identified that the governance of subsidiaries needed to be enhanced. Subsequent to year end, the framework was reviewed to address the identified governance shortcomings relating to the oversight of and reporting by subsidiaries. The revised framework will be implemented during the 2025 financial year. Our governance framework relies on clarity of roles between the shareholder, the Board and management, to achieve our strategic priorities within the legislative, regulatory and policy environment in which we operate. The powers of the Board and the shareholder are defined in Eskom’s memorandum of incorporation (MOI). 9 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Delivering value through our business model The availability and quality of our six capital inputs empowers us to deliver on our strategy and turnaround objectives. This enables us to deliver essential electricity services and outcomes that drive long-term value for our stakeholders and enable the growth and sustainability of South Africa. OUR SIX CAPITALS OUR INPUTS TO THE CAPITALS FINANCIAL CAPITAL R23.6 billion Funding raised (2023: R29.6 billion) Financial capital includes retained earnings, equity from National R76 billion Government support (2023: R21.9 billion) OUR TURNAROUND Treasury and Government-guaranteed debt funding. Lenders earn OBJECTIVES interest, but shareholders do not receive dividends due to financial constraints at this time.​ MANUFACTURED CAPITAL 46 788MW Nominal power station capacity (2023: 46 788MW) OR Operations recovery Manufactured capital consists of power stations as well as 7 495MW IPP capacity (2023: 7 110MW) transmission and distribution networks, supplemented by IPPs and 409 088km Power lines and cables (2023: 405 173km) FR Financial recovery imports. It is enhanced by commissioning new units, extending power lines, and maintaining existing plant.​ PCE People, culture and ethics NATURAL CAPITAL 99.5Mt Coal burnt (2023: 102.4Mt) Natural capital includes non-renewable energy sources like coal, 260 680Mℓ Net raw water used (2023: 256 430Mℓ) LS Legal separation water, and nuclear fuel, consumed to generate electricity. Waste is produced, impacting the environment. We aim to transition Non-renewable energy sources Renewable energy sources to renewable energy and mitigate impacts on bird life from 166 607GWh Coal (2023: 171 131GWh) 15 026GWh Hydro (2023: 15 687GWh) transmission networks. IR Read more about the turnaround 8 172GWh Nuclear power (2023: 9 803GWh) 11 573GWh Wind (2023: 10 394GWh) plan from page 34 5 143GWh Eskom and IPP OCGTs (2023: 4 116GWh) 6 401GWh Solar (2023: 6 425GWh) 518GWh Other (2023: Nil) 469GWh Other (2023: 362GWh) 39 601 Employees (at 31 March 2023) We aim to align our value creation HUMAN CAPITAL with a selection of UN SDGs Human capital involves employees’ competencies, focusing on R1.4 billion Training spend (2023: R1.1 billion) racial, gender and disability equity. Despite financial constraints, we 1 024 Headcount increase (2023: 820 decrease) enhance skills through training, balancing headcount changes with preserving our knowledge base. Loss of competent staff impacts 2 086 Technical and non-technical learners (2023: 1 568) this base. 519 Youth Employment Services learners appointed (2023: 523) SOCIAL AND RELATIONSHIP CAPITAL R93.1 million CSI committed spend (2023: R63 million) Social and relationship capital involves interactions with R240.4 billion Total measured procurement spend (2023: R206.2 billion) stakeholders, supporting economic growth, job creation, B-BBEE R2.9 billion Electrification spend funded by Government (2023: R2.4 billion) and socio-economic development. We acknowledge the negative health impacts of our operations and are working on projects to reduce emissions. INTELLECTUAL CAPITAL R123.5 million Research, testing and development spend Intellectual capital encompasses technology, organisational Information technology, telecommunications and operational technology SR Read more about our impact on knowledge, systems, policies and innovation. Our System Operator Organisational knowledge, intellectual property, systems, policies and procedures the SDGs in the sustainability manages the supply-demand balance, maintaining the frequency report at 50Hz, and is crucial for future technological advancements and operational improvements. 10 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Delivering value through our business model continued Eskom generates, transmits, and distributes electricity to industrial, mining, commercial, agricultural and residential customers, as well as redistributors, including municipalities and metros. GENERATION TRANSMISSION DISTRIBUTION OUTPUTS PRODUCTS WASTE AND BY-PRODUCTS Power stations produce electricity from coal, nuclear and renewable High-voltage electricity is transmitted via Medium- and low-voltage resources, using primary energy inputs such as coal, water, the national grid using transformers and electricity is distributed to 183 311GWh 29.27Mt limestone, fuel oil, diesel and nuclear fuel transmission lines customers and redistributors Electricity sales to Ash produced using substations and distributors and (2023: 30.20Mt) Coal and gas: We generate electricity from coal and gas, These transformers lower the voltage of the reticulation lines and cables industrial, commercial, optimising asset performance and utilising Eskom and IPP stations for electricity international, residential 145.30kt peaking capacity and other customers Particulate emissions SYSTEM OPERATOR (2023: 129.32kt) (2023: 188 401GWh) Nuclear: We operate Koeberg, Africa’s only nuclear power station We maintain the frequency of the power system at 50Hz to balance electricity supply 190.4Mt Renewables: Renewable energy (hydro, wind and solar) is CO2 emitted supplied from Eskom, IPPs and imports and demand in real time (2023: 187.5Mt) 1 Power stations generate electricity. We also purchase 4 Electricity is distributed to customers and externally generated energy from IPPs and import partners redistributed by municipalities and metros Distribution substation Hydro Industrial Nuclear High-voltage transmission line 3 Transformers lower the voltage Wind High-voltage transformer Poles 2 High-voltage electricity is transmitted via the Commercial Solar national transmission grid Coal-fired Residential 11 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Delivering value through our business model continued OUR CAPITAL OUTCOMES Value eroded Value preserved IMPACT ON MATERIAL MATTERS Value created FINANCIAL CAPITAL R89.8 billion Debt and interest repaid (2023: R72.2 billion) R43.4 billion EBITDA (2023: R34.6 billion, restated) M1 Enhancing financial sustainability R295.8 billion Revenue (2023: R259.5 billion) R74.4 billion Arrear municipal debt (2023: R58.5 billion) M2 Improving operational stability R33.9 billion Eskom and IPP OCGT spend (2023: R29.6 billion) M3 Recovering environmental performance MANUFACTURED CAPITAL 74.4km Transmission lines installed (2023: 326.1km) Eskom’s Standard Offer and Emergency Generation short-term IPP M4 Addressing climate change programmes, as well as Government’s RMIPPPP have come online R37 billion Capital expenditure (2023: 33.9 billion) M5 Regaining leadership stability 799MW from the synchronisation of Kusile Unit 5 54.56% Energy availability factor (2023: 56.03%) M6 Ensuring adequate skills NATURAL CAPITAL M7 Fulfilling Eskom's developmental 68 Environmental legal contraventions (2023: 105) mandate 0.79kg/MWhSO Relative particulate emissions (2023: 0.70kg/MWhSO) M8 Focusing on governance, 1.43ℓ/kWhSO Specific water consumption (2023: 1.39ℓ/kWhSO) compliance and ethics HUMAN CAPITAL M9 Combatting crime, fraud and 40 625 Employees at year end 930 Employees enrolled for further studies (2023: 795 employees) corruption 0.29 Lost-time injury rate (2023: 0.26) 3 062 Appointments through internal hires and promotions M10 Executing the legal separation (2023: 2 595) 5 Employee and contractor fatalities (2023: 5) R37.1 billion Gross employee benefit expense (2023: R34.3 billion) IR Refer to the material matters on page 20 SOCIAL AND RELATIONSHIP CAPITAL 88.1% Key customer delight (2023: 88.4%) 114 800 Electrification connections (2023: 102 590) KEY STAKEHOLDERS WE IMPACT 272 217 CSI beneficiaries (2023: 438 094) 329 days Loadshedding (2023: 280) Business and suppliers Employees General public and Investors INTELLECTUAL CAPITAL media Agrivoltaics training facility accredited at Komati Power Station to develop local skills and capabilities in the renewables space Customers Regulators Deployment of containerised smart microgrid solutions to support electrification Government and parliamentary committees Advancements in ash beneficiation research to reduce environmental impact IR For more information on stakeholders refer to page 21 12 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Board of Directors at 31 March 2024  efer to page 109 for full details of directors’ qualifications and directorships IR R DR MTETO NYATI (59) MR DAN MAROKANE (52) MR CALIB CASSIM (52) MS FATHIMA GANY (48) MR LWAZI GOQWANA (48) Chairman Group Chief Executive Group Chief Financial Officer Independent non-executive director Independent non-executive director Appointed to the Board in October 2022; Appointed to the Board in March 2024 Appointed to the Board in July 2017 Appointed to the Board in October 2022 Appointed to the Board in October 2022 appointed as Chairman in October 2023 Engineer with previous Eskom executive Chartered Accountant (SA), serving Finance professional, registered as a Engineer with experience in manufacturing, Engineer with experience in ICT; served as experience from 2010 to 2015, including in as Group Chief Financial Officer since Chartered Accountant (SA) construction, financial services, logistics, CEO of MTN SA and Altron Group Capital, Primary Energy as well as July 2017; acted as Group Chief Executive energy and government services A G H S Technology and Commercial from February 2023 to February 2024 G B H I MR CLIVE LE ROUX (72) MS AYANDA MAFULEKA (44) MR LESLIE MKHABELA (51) DR TSAKANI MTHOMBENI (44) MR BHEKI NTSHALINTSHALI (70) Independent non-executive director Independent non-executive director Independent non-executive director Independent non-executive director Independent non-executive director Appointed to the Board in October 2022 Appointed to the Board in October 2022 Appointed to the Board in October 2022 Appointed to the Board in October 2022 Appointed to the Board in October 2022 Engineer with experience as power station Finance professional, registered as a Legal professional with experience in Engineer with experience in sustainable Former trade unionist; served as general general manager at Matimba and Koeberg; Char tered Accountant (SA) restructuring of state-owned assets, development, energy management and secretary of the Congress of South African served as Eskom Chief Nuclear Officer commercial law and dispute resolution climate change strategy Trade Unions (COSATU) A B H B G I S A H S B I S G H S Demographics Age diversity Board meeting attendance Membership of Board committees 15% Denotes chair of a committee (60+) Audit and Risk Committee 94 A 7 5 1 39% (40–49) G B Business Operations Performance Committee Governance and Strategy Committee ACI ACI White Board and Board committee H Human Capital and Remuneration Committee males females male 93% meetings held during the year I Investment and Finance Committee (2023: 80) S Social, Ethics and Sustainability Committee ACI refers to African, Coloured and Indian population groups 46% Ages are shown at 31 March 2024. (50–59) 13 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Board of Directors at 31 March 2024 continued SKILLS AND EXPERIENCE CHANGES TO THE BOARD COMPOSITION In terms of Eskom’s MOI, the Board may consist of a maximum Climate change 4 of 15 directors. The majority of the Board must be independent and environment non-executive directors, and there must be at least two Economics executive directors. At the start of the year, the Board was fully 3 and regulation constituted with 13 independent non-executive directors and Engineering, science two executive directors in an acting capacity. 7 and technology On 30 October 2023, Mr Mpho Makwana resigned as Chairman Financial reporting, 6 of the Board and Dr Mteto Nyati was appointed as Chairman MS TRYPHOSA RAMANO (52) DR BUSISIWE VILAKAZI (40) audit and controls in his stead. Furthermore, Dr Rod Crompton resigned on Independent non-executive director Independent non-executive director Funding and 27 February 2024 as an independent non-executive director. 7 Appointed to the Board in October 2022 Appointed to the Board in October 2022 capital allocation Finance professional, registered as a Engineer with experience in ICT research Governance Following an extensive recruitment process, Cabinet approved Chartered Accountant (SA) and innovation, data science and analytics, and ethics 10 the appointment of Mr Dan Marokane as Group Chief Executive strategy and digital transformation (GCE) in December 2023. Mr Marokane officially joined Eskom B G I Information A B S technology 5 on 1 March 2024, although he was involved in the development of Eskom’s Corporate Plan for the 2025 to 2029 financial Infrastructure and years from February 2024. At the same time, Mr Calib Cassim, project management 3 previously acting as GCE after the departure of Mr André de Membership of Board committees Legal and Ruyter in the prior year, returned to the position of Group Denotes chair of a committee compliance 4 Chief Financial Officer (GCFO) under a permanent employment A Audit and Risk Committee agreement. Mr Martin Buys, previously acting as GCFO, Operations and B Business Operations Performance Committee maintenance 5 returned to the position of General Manager: Financial and G Governance and Strategy Committee Management Reporting and is no longer an executive director. People management, H Human Capital and Remuneration Committee health and safety 8 I Investment and Finance Committee At year end, the Board therefore comprised 13 directors, Stakeholder relations and including 11 independent non-executive directors and two S Social, Ethics and Sustainability Committee 6 change management executive directors. Based on the latest independent board DR CLAUDELLE VON ECK (53) Strategy and evaluation, the Board contains an appropriate balance of risk management 9 knowledge, skills, experience, diversity and independence for Independent non-executive director it to discharge its roles and responsibilities objectively and Appointed to the Board in October 2022 effectively, in line with King IV. Organisational development and change management professional; former CEO of the BOARD INDEPENDENCE Institute of Internal Auditors South Africa  efer to “Report by the Board” on page 44 for the Board’s IR R In terms of King IV and governance best practice, the Board should comprise a majority of non-executive activities and decisions for the year, its future focus areas as well A G H S directors, the majority of which should be independent. as the results of the board evaluation Our Board is comprised of 11 independent non-executive directors Subsequent to year end, the Board has requested the shareholder to appoint two independent non-executive directors to ensure Ages are shown at 31 March 2024. 2 executive directors a fully constituted Board of 15 directors. Specifically, the Audit and Risk Committee requires expertise in digital transformation and insurance, while the Investment and Finance Committee requires an additional member with expertise in corporate finance. The Board has also revised Eskom’s MOI to authorise the shareholder to appoint a lead independent director to strengthen governance and oversight and has made a recommendation for the shareholder’s consideration. 14 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Executive Management Committee at 31 March 2024  efer to page 111 for full details of Exco IR R members’ qualifications and directorships MR DAN MAROKANE (52) MR CALIB CASSIM (52) MR MONDE BALA (50) MS FAITH BURN (55) Group Chief Executive Group Chief Financial Officer Group Executive: Distribution Chief Information Officer Appointed to Exco in March 2024 Appointed to Exco in July 2017 Attended Exco in a participatory role from Appointed to Exco in May 2020 5 years in Eskom (from 2010 to 2015) 22 years in Eskom April 2023; appointed to Exco in June 2023 3 years in Eskom B Sc Chemical Engineering (University of 27 years in Eskom M Sc Mathematics (University of B Accounting Sciences (Unisa), Chartered Cape Town), M Sc Petroleum Engineering Accountant (SA), Master of Business B Sc Electrical Engineering (University Johannesburg), Master of Business Leadership (University of London), MBA (University of Leadership (Unisa) of Cape Town), Master of Engineering (Unisa) Cape Town) (University of Witwatersrand) MR BHEKI NXUMALO (55) MS ELSIE PULE (56) MS JAINTHREE SANKAR (52) MR SEGOMOCO SCHEPPERS (60) Group Executive: Generation Group Executive: Human Resources Chief Procurement Officer Group Executive: Transmission Attended Exco in a participatory role from Appointed to Exco in November 2014 Appointed to Exco in March 2021 Attended Exco in a participatory role from April 2023; appointed to Exco in June 2023 26 years in Eskom 30 years in Eskom April 2023; appointed to Exco in June 2023 27 years in Eskom 30 years in Eskom BA (Hons) Psychology (University of B Com (Hons) Business (Unisa), MBA National Higher Diploma in Chemical Pretoria), M Sc Business Engineering Sustainable Business (University of Southern B Sc Engineering (University of Engineering (Vaal University of Technology), (Warwick University) Queensland), Master of Project Management Witwatersrand), MBA (University of MBA (North West University) (University of Southern Queensland) Witwatersrand) Demographics Age diversity Exco meeting attendance Years of service 9% (40–49) 18% 1–9 years 4 (60+) 7 4 20 20–29 years 30+ years 3 4 ACI ACI 87% Exco meetings held during males females the year (2023: 15) ACI refers to African, Coloured and Indian population groups 73% (50–59) Ages are shown at 31 March 2024. 15 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Executive Management Committee at 31 March 2024 continued CHANGES TO EXECUTIVE MANAGEMENT The Executive Management Committee (Exco) is accountable for executing the strategy of the Board and managing Eskom’s day-to-day operations. Exco is established by the GCE and is supported by several subcommittees. IR T he structure of the Exco subcommittees is shown on page 8 The following changes took place during the year: • Mr Bheki Nxumalo was appointed as Group Executive: Generation with effect from 1 April 2023 • Mr Jan Oberholzer retired from Eskom on 30 April 2023 and the position of Group Chief Operating Officer (GCOO) was subsequently removed from the organisational structure. The executives for Generation, Transmission and Distribution, previously reporting to the GCOO, attended Exco in a MS NATASHA SITHOLE (61) MR VUYOLWETHU TUKU (48) participatory role from 1 April 2023 and were appointed as members of Exco from 1 June 2023 Acting Group Executive: Government and Group Executive: Transformation Management • Ms Nthato Minyuku resigned as Group Executive: Government and Regulatory Affairs on 30 April 2023. Regulatory Affairs Office Ms Sumaya Nassiep acted in the position from 1 June 2023 and subsequently resigned from Eskom on Appointed to Exco in August 2023 Appointed to Exco in July 2020 31 August 2023. Ms Natasha Sithole has been acting in the position from 10 August 2023 31 years in Eskom 3 years in Eskom • Ms Mel Govender resigned as Group Executive: Legal and Compliance on 30 June 2023. Ms Winile Madonsela acted in the position from 7 July 2023 to 14 December 2023, followed by Ms Dawn Jackson B Com (Unisa) B Sc Electrical Engineering (University of from 15 December 2023 to 31 January 2024. Mr Sthembiso Vezi attended Exco in a participatory role Cape Town), MBA (University of Witwatersrand) from January 2024 and was appointed to act in the position from 1 April 2024 • Mr Dan Marokane was appointed as GCE from 1 March 2024. Mr Calib Cassim, previously acting as GCE, Skills and experience returned to the position of GCFO Climate change 4 Subsequent to year end, the following changes took place: and environment • Mr Jerome Mthembu was appointed as Head of Legal and Compliance on 1 May 2024 Economics • The departure of Ms Elsie Pule, Group Executive: Human Resources, was announced in June 2024, with and regulation 3 her last day on 31 July 2024. To ensure leadership stability and business continuity, Mr Monde Bala was Engineering, science appointed to act in the position with effect from 24 June 2024, in addition to his role as Group Executive: 7 and technology Distribution, while the recruitment process is underway Financial reporting, • The fixed-term contract of Mr Vuyolwethu Tuku, Group Executive: Transformation Management Office, audit and controls 7 came to an end on 30 June 2024 Funding and In May 2024, the GCE announced a new Exco structure to address existing business challenges and future- capital allocation 6 MR STHEMBISO VEZI (50) proof Eskom to enable growth and long-term sustainability. Acting Group Executive: Legal and Governance Compliance 10 The new Exco structure includes a combination of existing and new roles to enable responsive decision- and ethics Attended Exco in a participatory role from making required to deliver on our strategic initiatives and navigate the rapidly changing environment in Information which we operate, including focusing on the expansion of Eskom’s renewable energy portfolio in line with January 2024 technology 4 1 year in Eskom our Just Energy Transition strategy. Infrastructure and The structure focuses on the execution of our legal separation activities and the necessary adaptations B Proc (University of Transkei), Admitted 7 project management Attorney, Master of Business Leadership for the future generation, transmission and distribution subsidiaries. The group executives for Generation (Unisa) Legal and and Distribution serve as the divisional managing directors of their respective divisional boards while the compliance 3 separate subsidiaries are being established. Mr Segomoco Scheppers, Group Executive: Transmission, Operations and is serving as the interim CEO of NTCSA while the recruitment process is underway. maintenance 5 The following executives were appointed in terms of the new Exco structure from 1 November 2024: People management, Ms Portia Mngomezulu, Group Executive: Corporate Services; Ms Nontokozo Hadebe, Group Executive: health and safety 10 Strategy and Sustainability; Mr Roman Crookes, Group Executive: Group Capital; and Mr Len de Villiers, Stakeholder relations and Chief Technology and Information Officer. Mr Alfred Seema was appointed as Group Executive: Strategic change management 10 Delivery from 1 December 2024. Strategy and Mr Jerome Mthembu, Ms Natasha Sithole, Ms Jainthree Sankar and Ms Faith Burn are no longer members 10 Ages are shown at 31 March 2024. risk management of Exco. 16 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Considering our operating context • Decarbonisation, decentralisation, Breakdown of planned projects by technology • Electricity supply industry-related policy digitisation and democratisation and regulatory decisions at varying levels of – Shift away from large-scale implementation: e.g. Electricity Regulation Act 2% 3% coal assets towards cleaner, G lob a l as amended, draft Integrated Resource Plan, decentralised systems 11% Government’s Roadmap for Eskom, Electricity underpinned by decreasing Pricing Policy renewable technology costs, h A f r ic a 34% more stringent environmental S ou t • Government support for market liberalisation, leading to competition and increase in self- policies, and commitment to generation that requires grid capacity Paris Agreement suppl y in • Interventions to increase grid capacity include 4 291GW ri cit y du “first ready first served” grid allocation rules, 19% • Constrained fiscus with limited ct curtailment, private sector investment in grid st Ele GDP growth outlook, exacerbated expansion projects, etc. ry by socio-economic issues, impacting government support and appetite • Financial challenges: high fixed cost structure, for tariff increases Eskom increasing costs of production (diesel) – outdated • SOC structures and role tariff structure and inadequate tariff level, reducing developments: State-owned holding energy sales, escalating municipal debt, National 30% company formation underway Treasury debt relief (R250 billion) to support going to consolidate SOCs, Minister of Wind Solar Thermal concern assumption, with associated conditions Electricity appointed to address Hydro Nuclear Other • Operating challenges: plant reliability challenges, energy crisis (MOU with DPE) non-technical electricity losses, grid constraints • Implementation of SA level policies: • Environmental legal challenges: compliance to e.g. NDP aims to drive social and Minimum Emission Standards, legal contraventions, economic advancement, Climate significant cost to address (around R340 billion). Change Act, 2024, which enables A negative decision from DFFE may require plant climate change response and just of up to ~16GW to shut down by 2025 transition GW planned new capacity 1 477 GLOBAL OUTLOOK Despite the sluggish economic outlook, global electricity production is Energy dynamics globally are characterised by the four D’s – expected to increase by 2 490TWh or 8.7% by 2025, with renewable 1 272 decarbonisation, decentralisation, digitisation and democratisation. energy expected to see the greatest increase, at almost 30% of the These dynamics are affected by commitments to climate change, as well current levels of energy generated by renewables. A global overview of as geopolitics impacting fuel and technology value chains. new generation projects planned between 2024 and 2030 show that over 834 75% of all planned power generation projects coming online by 2030 are Decarbonisation is a shift towards more carbon-efficient energy sources renewables, specifically solar PV and wind. Thermal projects, based on driven by technological developments, decreasing renewable energy coal, gas and dual fuel, are generally utilised to complement renewables. technology costs and more stringent environmental policies in line with 474 the Paris Agreement. Geopolitical issues, like Russia’s invasion of Ukraine Within the African continent, demand for energy services is set to grow and the conflict in the Middle East, continue to impact fuel prices, energy rapidly, while electricity affordability remains a priority. Given that Africa policies and trade agreements. Large utilities and traditional customers has the world’s lowest levels of per capita use of modern energy, the 103 131 are increasing their participation in distributed energy resources, which demand for modern energy in Sub-Saharan Africa is expected to increase brings about new roles and participants in the power market. by one-third between 2020 and 2030, due to the growing population. Wind Solar Thermal Hydro Nuclear Other Solar-powered microgrids and standalone systems are considered the PV Decentralisation will require utility operations to be decentralised for most viable solutions to electricity access, with over 29 300 microgrids local area control. Future energy systems will further incorporate many Source: GlobalData, 2024. planned worldwide, 95% of which is in Africa and South Asia. Microgrid customer technologies through decentralised generation and ownership development is becoming more popular due to declining costs, projected – democratisation. to decrease from $0.55/kWh in 2018 to $0.20/kWh by 2030, and a need for electrification of areas without electricity. 17 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Considering our operating context continued SOUTH AFRICAN CONTEXT These trends are increasing the demand for Government support, install solar during the 2024 year of assessment, and a revised bounce- South Africa, like most developing countries, is grappling with putting further strain on the sustainability of public finances. As a result, back loan scheme to help small businesses transition to solar. As an the competing objectives of balancing energy security, equity and Government’s ability to support Eskom going forward will be limited, added benefit, in certain areas surplus power generated can be sold sustainability, commonly referred to as the energy trilemma. which, coupled with little appetite for substantial electricity tariff back to the grid increases given prevailing socio-economic conditions, could see Eskom’s • Enabling private generation: The Electricity Regulation Act has been Energy security financial challenges continuing over the medium term. Furthermore, as a amended to make it possible for the private sector to invest in much Unreliable performance of Eskom’s generating plant and delay in IPP state-owned entity, Eskom needs to identify opportunities to maximise larger energy projects without any regulatory limitation on size. programmes, leading to 4 000MW to 6 000MW shortfall in available its socio-economic contribution and alleviate unemployment. This has unlocked a pipeline of new energy projects which are in capacity to meet demand development or construction across the country. It is estimated that THE ELECTRICITY SUPPLY INDUSTRY WITHIN 6.43GW of projects have been registered with NERSA, which will go a THE LOCAL CONTEXT long way in contributing to electricity supply The South African electricity supply industry has seen several key • Eskom’s Standard Offer and Emergency Generation programmes have developments recently, such as the announcement of the country’s been implemented to buy power from companies that can provide Energy Action Plan, promulgation of the Electricity Regulation additional capacity over the next three years. This additional power Amendment Act, 2024 and the release of the draft Integrated Resource contributes to lowering the utilisation of OCGTs, reducing the overall Plan (IRP 2023). cost of meeting demand Specific to electricity policy and direction, the National Energy Crisis Committee (NECOM), led by the Minister of Electricity and Energy, is Did you know? working to implement the Energy Action Plan announced by President Using sophisticated modelling, we have estimated that more than Ramaphosa in July 2022. 6.1GW of behind-the-meter rooftop PV capacity has been installed in South Africa. Our estimate has been corroborated by the South The Energy Action Plan has five objectives: African Photovoltaic Industry Association. Energy affordability and access Energy sustainability SA’s socio-economic status Around 80% of electricity 1. Fix Eskom and improve the availability of existing supply and high levels of poverty, generation is fossil fuel based, 2. Enable and accelerate private investment in generation capacity In support of the transformation of the electricity supply industry, unemployment and inequality contributing around 40% to SA’s the Electricity Regulation Amendment Act, 2024 was gazetted on 3. Accelerate new generation capacity greenhouse gas emissions 20 August 2024, with an effective date of 1 January 2025. It lays the Low GDP growth, negatively 4. Enable businesses and households to invest in rooftop solar legislative foundation for the development of electricity market rules as affected by the energy crisis Significant risk presented 5. Fundamentally transform the energy sector well as the establishment of an independent state-owned Transmission by non-compliance with air System Operator within five years from the Act being promulgated. The quality standards Progress has been made against the Energy Action Plan: Transmission System Operator will provide a platform for generators, consumers, traders and retailers to trade with one another, as is the • Fixing Eskom and improving the availability of existing supply: case in other countries around the world. While the exact form of the Over the last year, electricity supply shortages have disrupted economic Improved plant performance has already brought down the number of Transmission System Operator is being finalised, NTCSA will fulfil this activity and increased operating costs for businesses, many of which rely breakdowns this year, with a target of increasing available capacity by role in the interim; it will purchase power from Eskom’s Generation on costly generators. Weak structural growth and the residual impact of 3 000MW by next year Division, IPPs and cross-border suppliers. NTCSA must now apply for the the COVID-19 pandemic have exacerbated socio-economic challenges. South Africa has recovered its pre-pandemic gross domestic product • We have reintroduced the Distribution Demand Management relevant licences to carry out that function. Work is underway to clarify (GDP), but other socio-economic indicators such as unemployment and Programme (DDMP) which will pay qualifying businesses to reduce the role and associated implications set out by the Electricity Regulation inequality remain stubbornly weak. their power usage by investing in energy efficiency technologies or Amendment Act beyond the transition period of up to five years. shifting their operations to off-peak times The economy is expected to grow by only 1.8% in 2024, slower than • Procurement of additional capacity: An additional 400MW has been This development facilitates the future transformation of the electricity other emerging markets, because of high levels of loadshedding and secured from Cahora Bassa in Mozambique, with plans to import supply industry by enabling more players in the generation sector and structural challenges in transport and logistics, which negatively impact additional power from neighbouring countries allowing consumers to choose from which energy supplier they want investor confidence. Unemployment remains above pre-pandemic levels, • Government has approved the procurement of new wind, solar and to buy power. This will enable competition and efficiency from multiple at 32.6% in 2023. The unemployment rate is highest among youths aged battery storage projects with capacity of over 14 000MW from IPPs electricity generators. The commencement of trade by NTCSA further between 15 and 24, at around 61%. Inequality in South Africa remains paves the way for the creation of an independent market that will enable • Businesses and households to invest in rooftop solar: Government among the highest in the world, with poverty estimated at over 60% more participation, competition and efficiency in the electricity supply introduced special tax incentives for businesses and households who based on the upper-middle-income country poverty line. industry in the medium to long term. 18 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Considering our operating context continued Global view of future projects 2% 3% 11% The draft IRP 2023 has been released by the then DMRE, and aims to ensure be affected by escalating municipal arrear debt and growing electricity theft, with security of supply by balancing supply with demand, considering the environment almost R23 billion of potential revenue being lost due to electricity theft. Together, 34% and total supply costs. The plan considers two horizons: it addresses generation these challenges have reduced our bottom line by around R60 billion during the year capacity constraints up to 2030 and considers long-term electricity generation under review. planning from 2031 to 2050, to achieve a resilient net zero energy sector by 2050. The update of the IRP 2023 provides much-needed certainty in planning for the Environmental risks remain significant to the generation business. We have experienced 19% 4 291GW energy sector and allows us to update our long-term planning outlook. The initial legal challenges relating to compliance with the Minimum Emission Standards (MES) and outcomes of the draft IRP have been considered against global developments and have recorded a high number of legal contravention incidents. the Eskom 2035 strategy, which is under review. The Transmission Development Plan (TDP) indicates that the transmission network capacity must be increased by around 14 000km of high-voltage lines by 2032. To meet IR For a discussion of Eskom’s strategy and strategic objectives, refer to “Our the required grid capacity, we are exploring many interventions to increase the average strategic and risk landscape – Our strategy and turnaround plan” from page 34 line build rate to 1 400km per year. The timely acquisition of servitudes, increasing 30% contractor capacity and effective project delivery will be required to deliver against The biggest difference between the global planned projects and the South these targets. African outlook is that the global outlook features hydro and nuclear projects Eskom 2035 outlook (under review) In the short term, we are implementing several innovative approaches to alleviate 14% before 2030. South Africa has initiated a nuclear procurement process, which grid constraints. First, the grid allocation rules have been revised to shift from the is only expected to reach commercial operation beyond 2030. No hydro or “first come first served” approach to adopting the “first ready first served” principle. pumped storage was indicated in the draft IRP 2023 plan prior to 2030, given Secondly, a curtailment framework is being implemented to increase renewable the lengthy timelines associated with this technology. All the outlooks – be it the energy supply in grid-constrained areas. Thirdly, an initiative to secure the supply of global planned projects, the draft IRP or Eskom’s modelling – indicate a significant transformers for grid expansion has been launched, which includes the accreditation amount of solar and wind generation leading up to 2030, at over 50% of all new of international suppliers as well as the establishment of enabling agreements for all 46% capacity. This analysis of global and policy development allows us to identify the transformer classes. All these interventions are intended to ensure that additional 36.3GW likely pathway for future generation which in turn influences investment decisions capacity is connected to the grid in the shortest possible timeframe. across the value chain. In the distribution sector, we have to contend with the addition of renewable energy The Climate Change Act, 2024 was assented to by the President, but is yet to sources, rapid urbanisation and digital technology. Globally, distribution networks 41% come into effect. It sets out the framework for the regulation of greenhouse gas are navigating a surge in electricity and energy demand, which increases pressure on emitting sectors. our infrastructure. Large industrial and commercial customers are opting to generate Lastly, the draft National State Enterprises Bill was tabled in Parliament, although their own renewable energy, while residential customers are supplementing their it was not approved before Parliament was dissolved ahead of South Africa’s supply with rooftop solar PV installations. Sales volumes have reduced by 2% annually general election at the end of May 2024 and will have to be tabled before the for the last seven years and are projected to decline by a further 1% per year into the Draft IRP 2023 newly constituted Parliament. The Bill is set to create a new state-owned holding future, driven by ongoing electricity shortages and defection of customers. 2% company which will manage the finances of the nation’s various state-owned 19% enterprises. This Bill is intended to ensure that Government focuses on policy and Therefore, it is critical to counteract customer defection with additional or new regulatory issues, while a board of experienced professionals oversees operations revenue streams to ensure sustainable revenue streams. Once the Distribution to ensure the financial sustainability of state-owned enterprises. System Operator is established, new energy trading platforms for Distribution will be 33% introduced, allowing for an increase in revenue. Apart from electricity theft, the most These developments, together with the progress in the restructuring of serious threat to the Distribution balance sheet is escalating municipal debt, both of Eskom, the Eskom Debt Relief Act, 2023 as amended, the promulgation of the which must be managed for long-term success. 30.5GW Electricity Regulation Amendment Act, 2024 and the revision of the IRP, illustrate Government’s continued commitment to ensuring the long-term sustainability of Our biggest challenges are improving energy availability, acquiring servitudes for the electricity supply industry. grid expansion, halting the escalation of municipal arrear debt and dealing with electricity theft. In addition to these, the evolution of the electricity supply industry THE ESKOM PERSPECTIVE requires that we adapt our business model to participate optimally under the new The most significant operational challenge is the continuing deterioration energy market rules. Changes anticipated in the energy sector present numerous in the generation plant energy availability factor (EAF). This has led to the opportunities associated with clean energy generation, implementing smarter 46% highest number of days of loadshedding since it was introduced in 2007, and trading and decision-making platforms through the establishment of the system Wind Solar Thermal exceptionally high utilisation of OCGTs. Furthermore, our revenue continues to operator structures, focused customer solutions, and expansion of the grid to enable Hydro Nuclear Other renewable energy connection. 19 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Determining material matters We classify material matters as those high-likelihood, high-consequence Turnaround Key Board factors that significantly impact the creation, preservation or erosion of Item Material matter Description objective focus area enterprise value over the short, medium and long term. By their very nature, these include both positive and negative matters. We apply the M1 Enhancing financial This speaks to our ability to remain financially viable and meet our obligations in the FR OR B2 B3 B6 concept of double materiality in the integrated report, in other words, by sustainability, through future. It encompasses all elements of financial performance, such as revenue generation, considering both those external matters that may have an impact on our cost-reflective tariffs, cost management and long-term financial planning based on tariff certainty. It further financial results (financial materiality), as well as those internal matters managing costs as well as considers the availability of sufficient cash and resources to meet short- to medium-term that have an impact on the outside world (impact materiality). We also the Government and obligations and includes our ability to continue operating as a going concern. It relies on consider qualitative and quantitative matters material to our operations municipal debt relief Government support through the debt relief programme, and includes addressing the and our turnaround and strategic objectives, as well as strategic risks and programmes payment of arrear municipal debt through the municipal debt relief programme opportunities, the Board’s key focus areas and the six capitals. M2 Improving operational Encompasses efforts to enhance the stability and reliability of our operations to lessen FR OR PCE B1 B2 B3 stability to lessen and, and, ultimately, end the electricity crisis, thereby ensuring a secure and reliable supply of Focusing on material matters ensures alignment of efforts towards ultimately, end the electricity to meet the needs of consumers and industries. It covers our generation plant B4 B5 B6 addressing environmental, social and governance matters and those electricity crisis and network performance, as well as ensuring sufficient generation capacity being added factors with the most critical impact on long-term sustainability and value through the new build programme and IPPs. It further relies on primary energy security creation if they are not managed properly. and access to sufficient water resources to support generation activities. By reducing loadshedding, the increased supply of electricity would generate additional revenue, Prior year material thereby positively impacting financial performance. Conversely, operational stability relies matters on sufficient liquidity to plan and execute outages and maintenance effectively M3 Recovering environmental We need to adhere to environmental regulations and beyond that, minimise our FR OR PCE B2 B3 B6 performance and environmental impact through sustainable practices, emission reduction and renewable Changes in the compliance energy initiatives external environment Addressing climate change Covers our strategies and actions in response to climate change, including reducing carbon OR LS B2 B4 B6 Prioritisation Material matters M4 and implementing Eskom’s emissions and transitioning to cleaner energy sources. It includes promoting a sustainable Issues raised by based on identified for Just Energy Transition and equitable energy transition aligned to the goals of the Just Energy Transition stakeholders discussion in the likelihood and Restoring leadership Ensuring consistent and effective leadership within Eskom to provide strategic direction, consequence integrated report M5 OR PCE B1 stability and strengthening effective decision-making and stability within the organisation, which is crucial to address Risks and the quality of leadership challenges and building a high-performance ethical culture opportunities M6 Ensuring adequate skills in Fostering a work culture that promotes high performance, ethics and integrity while OR PCE B1 B6 a high-performance ensuring that Eskom has the necessary skilled workforce to effectively execute and ethical culture manage operations, drive innovation and address future challenges Key matters considered by Board M7 Fulfilling Eskom’s We support Government’s developmental and transformation objectives, through the OR B2 B5 B6 developmental mandate transformation of our workforce, electrification initiatives funded by Government, CSI programmes and transformation of the procurement landscape This process has resulted in the identification of the following material matters, which have been considered and endorsed by the Audit and Risk M8 Focusing on governance, Upholding strong corporate governance practices and ensuring compliance with relevant FR OR PCE B2 B3 B6 Committee (ARC) on behalf of the Board. compliance and ethics laws, regulations and standards to promote transparency, accountability and ethical conduct within Eskom’s operations Key board focus areas M9 Combatting crime, fraud To turn around the organisation successfully, we have to deal proactively and effectively FR OR PCE B2 B3 B5 B1 Stabilising the leadership team and building a leadership pipeline and corruption with fraud, corruption and the criminal elements that have infected the organisation B6 B2 Turning around operational performance to reduce and,  ultimately, end loadshedding Executing the legal Advancing the legal separation of Transmission, Distribution and Generation based on M10 OR LS B4 B6 B3 Strengthening the balance sheet separation DPE’s Roadmap, which involves the creation of separate subsidiaries to enhance operational efficiency, transparency and accountability B4 Executing the legal separation and securing Eskom’s rightful place  in the changing electricity supply industry Turnaround objectives B5 Fighting crime, fraud and corruption B6 Reconnecting with stakeholders FR Financial recovery OR Operations recovery PCE People, culture and ethics LS Legal separation  20 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Building effective stakeholder relationships Through the adoption of sustainable practices, Eskom generates value RESPONDING TO STAKEHOLDERS To gauge the quality of relationships, a six-monthly pulse check survey not only for the organisation, but also for the wider society within which We have developed a comprehensive stakeholder framework founded on a serves as a relational survey tool aimed at evaluating stakeholders’ it operates. Stakeholder collaboration is crucial to formulating business robust understanding of stakeholder concerns and Eskom’s future trajectory. experience. The survey questions are designed to address the key strategy and direction. We closely engage with stakeholders to meet their The framework encompasses relationship management, engaging with dimensions of inclusive stakeholder engagement. This approach facilitates expectations while considering the impact of our operations. stakeholders and responding to stakeholder concerns, all of which relies on a comprehensive understanding of stakeholders’ overarching perceptions effective communication. Both the Board and Exco oversee the execution of their interactions with Eskom. The concise and straightforward nature Eskom remains vulnerable to reputational risk and low levels of support of a stakeholder strategy and engagement plan which underpin the business of the survey questions has yielded a notable increase in stakeholder from key stakeholders. We actively mitigate reputational risks through direction and the management of organisational risks. responses. The survey findings are disseminated to Exco and the Board continuous stakeholder engagements and the implementation of strategic to inform their oversight responsibilities, ultimately shaping future communication plans. We actively manage stakeholder concerns through oversight and by stakeholder engagement strategies. making well-considered decisions in response to legitimate stakeholder RESPONSIBILITY FOR STAKEHOLDER MANAGEMENT issues. We regard our social licence to operate within the context of our Based on the feedback, stakeholders appear satisfied with the In alignment with the King IV governance principles, the Board has reputation, where successful implementation depends on interactions frequency of engagements and timeliness of our responses, as adopted a governance model that prioritises stakeholders and emphasises with an extensive network of stakeholders, including communities and well as the accessibility of information and that priority issues are accountability. civil society groups. pursued. Of concern is that stakeholders are ambivalent regarding the trustworthiness of our information and whether stakeholders’ responses King IV accountability principles Stakeholder management is considered a key risk category, and treatment are considered in Eskom’s decision-making. plans are in place to manage the associated risk. Inclusivity Materiality Responsiveness Impact Transparency Through ongoing evaluation and benchmarking, we aim to build trust, We acknowledge the significance of feedback as a crucial component in strengthen relationships and drive a positive impact for all stakeholders. The Board remains dedicated to acknowledging the importance of being establishing trust, transparency and accountability. While we are dedicated to accountable and transparent to stakeholders in relation to Eskom’s operating as a transparent organisation that communicates material concerns Did you know? performance management. In fulfilling its governance mandate, the Board in a balanced way, we must also adhere to legal and regulatory obligations. Consequently, we will conform to laws, shareholder expectations and Eskom’s Media Desk increasingly employs social media to monitor adopts a stakeholder-inclusive approach to effectively balance the needs, internal processes when addressing the needs of stakeholders, while ensuring stakeholder conversations and utilises media analysis to provide interests and expectations of material stakeholders in Eskom’s long-term compliance with the Promotion of Access to Information Act, 2000 and the valuable insight and knowledge to keep stakeholders informed best interest. Protection of Personal Information Act, 2013. on pertinent topics. Effective media management is an important The Social, Ethics and Sustainability Committee (SES) has delegated instrument in rebuilding trust and fostering robust relationships the management of stakeholder relationships to executive leadership. Stakeholders are likely to have varying opinions on whether Eskom with the public and other stakeholders. Therefore, Exco: achieved its objectives, therefore, feedback should be assessed in terms of a business approach embodying open and transparent business • Acts as the custodian for all Eskom’s key stakeholder groups, with Exco STAKEHOLDER LANDSCAPE practices, ethical behaviour, respect for stakeholders and a commitment members assigned to various relationships as set out in a stakeholder Our stakeholder groups have distinct interests, concerns and to add economic, social and environmental value. matrix, which identifies key stakeholders expectations. Investors focus on returns and financial stability, together • Oversees and monitors stakeholder engagement performance and Stakeholder perception survey with future predictability, whereas Government agencies and regulatory outcomes through weekly briefings and quarterly reports Please highlight the areas of concern and help us to meet your bodies emphasise compliance and effective implementation of energy • Measures and assesses the impact of Eskom’s short-, medium- and expectations and other policy. Customers prioritise reliable and affordable electricity, long-term engagements through a six-monthly pulse check survey. while employees value job security and a supportive work environment. Key areas for improvement are translated into actions within 1. Indicate your business sector Local communities are concerned about the social and environmental stakeholder engagement plans Government impacts of our operations, and environmental organisations advocate for • Monitors, tracks and responds to non-technical risks through a weekly Business organisation sustainable practices. issues meeting Investor/Financial group Industry Academia Civil society Employee 2. Do we engage frequently enough? 21 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Building effective stakeholder relationships continued The table below sets out our various stakeholder groups and why they matter. It also indicates what their various concerns are and how we respond. We also demonstrate the link to our material matters: Stakeholder Impact on value creation Concerns Response Material matters Material matters Business and Their involvement in our supply Fair competition, reliable supply chain, ethical Fair and transparent procurement M1 M2 M4 M5 M6 M1 Enhancing financial sustainability suppliers chain and business activities practices, fraud and corruption, impact of practices; ethical supplier guidelines Organisations involved contributes to operational loadshedding M7 M8 M9 M10 in business activities efficiency and success, despite the M2 Improving operational sustainability and supply chain possibility of fraud and corruption M3 Recovering environmental performance Civil society They play a crucial role in Environmental impact, social responsibility, Engagement on environmental and M2 M3 M4 M7 M9 Non-governmental advocating for social and impact of loadshedding social issues; sustainable community organisations and environmental concerns development initiatives M4 Addressing climate change community groups M5 Restoring leadership stability Customers The satisfaction and consumption Service reliability, affordability, impact of Enhanced service reliability; tariff M1 M2 M4 M8 Individuals and entities patterns of individuals and entities loadshedding, future tariff certainty affordability; transparent pricing consuming Eskom’s directly impact our revenue and practices M6 Ensuring adequate skills services service delivery M7 Fulfilling Eskom’s developmental mandate Employees Our workforce drives operations, Employee benefits, work conditions, Skills development programmes; M1 M2 M5 M6 M7 Our workforce innovation and organisational wellbeing, career growth, job security, impact employee wellbeing initiatives; ethical performance of loadshedding guidelines and compliance measures M8 M9 M10 M8 Focusing on governance, compliance and ethics Government Various departments provide Energy policy, economic impact, financial and Collaboration on policy development; M1 M2 M3 M4 M5 Regulatory and oversight, direction and financial operational sustainability, impact of support for debt relief measures; M9 Combatting crime, fraud and corruption policy-making entities support essential to our loadshedding, environmental compliance, sustainable energy initiatives; progress M6 M7 M8 M9 M10 operations climate change commitments, corruption on legal separation M10 Executing the legal separation Investors They contribute capital, which Financial performance, return on investment, Debt relief measures; transparent M1 M2 M3 M4 M5 Investors, allows us to enhance our asset financial and operational sustainability, future reporting; communication on legal bondholders, lenders base, and play a significant role in tariff certainty, climate change commitments, separation progress M8 M9 M10 and ratings agencies shaping our financial future corruption, legal separation Media They hold Eskom accountable, News coverage, transparency, impact of Timely and accurate information M1 M2 M5 M9 M10 Journalists and media disseminate information and shape loadshedding dissemination; media engagement on outlets public perception key initiatives Parliamentary Government entities responsible Financial and operational sustainability, Implementation of debt relief measures; M1 M2 M3 M8 M9 committees for oversight and monitoring of environmental compliance, governance and transparency in governance practices; Government entities our performance, financial compliance, corruption, legal separation engagement on legal separation process M10 overseeing our management and governance operations Regulators Entities responsible for setting Financial and operational sustainability, Input on tariff methodology and M1 M2 M3 M4 Entities responsible for tariffs, ensuring compliance, environmental performance and compliance allowed revenue, including certainty regulating our promoting fair competition and around future tariffs; compliance with activities protecting consumer interests. environmental regulations; We are responsible for complying implementation of sustainable practices; with laws and regulations climate change mitigation strategies International groups They provide valuable global Sustainable development, climate change Collaboration on sustainable M2 M3 M4 M8 M9 Global organisations perspectives and share best mitigation development goals; climate action and associations practices in the energy industry strategies 22 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Leadership reports Message from the Chairman 24 Chief Executive’s review 26 Chief Financial Officer’s commentary 30 23 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Message from the Chairman ESKOM’S SYSTEMIC CHALLENGES In the past decade, we’ve also witnessed an escalation in municipal arrear When the current Board took over in October 2022, we found a debt, with little impact from Eskom’s past interventions to stem the tide, dysfunctional organisation that was facing several systemic challenges as many have been challenged in the courts. A concerning trend in this which had a profound effect on operations, finances and, ultimately, area is that metros, which were once reliable payers, have also started Eskom’s sustainability. paying late. If we are unable to collect the revenue owed to us, we cannot properly account for it, resulting in a direct negative effect on the Firstly, and most noticeably in the eyes of our customers, we were dealing bottom line. It is simply not acceptable that municipalities and metros are with extreme levels of loadshedding, which had a crippling impact on collecting electricity revenue but failing to pay over Eskom’s share. No the country and served as a structural constraint to economic growth. organisation can remain in business if its product is given away for free. That was primarily caused by coal-fired power stations which were poorly maintained and unreliable. Added to this were constraints on the The Board also encountered an outdated business model, with Eskom transmission grid which meant Eskom was unable to connect additional being one of the last remaining vertically integrated utilities in the world. IPP capacity as quickly as required to alleviate some of the supply Added to that was a dysfunctional organisational culture lacking a strong constraints. sense of ethics, characterised by low staff morale; a lack of skills in critical areas; employees lacking trust in leadership and operating in a climate On the financial side, Eskom had a weak balance sheet with an of fear; as well as crisis fatigue and burnout. This was exacerbated by unsustainably high debt burden. A key contributor to that is a tariff that leadership instability and a lack of strong leaders in many areas. The state is not yet cost reflective and doesn’t provide a fair return to recognise capture years took a significant toll on Eskom, and in the aftermath, the the significant investment in new generation capacity over the past two prevalence of crime, fraud and corruption was widespread. decades. Unless the tariff is corrected, it could also constrain the network strengthening and expansion required to connect future IPP bid windows Eskom also found itself in the midst of a transition to clean energy and a and enable the shift to a lower-carbon energy mix. need for improved environmental compliance, driven by global objectives the ground running, and not waste months getting to know the business. to save the planet from the devastating risk posed by the effects of Dan has the courage, passion and sense of urgency to galvanise Eskom’s There has been significant pressure on revenue from multiple factors. climate change. Guardians and ethically lead from the front. The immediate priorities we Firstly, sales volumes have been declining for the past decade. This can be set for him were to deliver on the operational recovery, advance the legal attributed to demand being suppressed by ongoing economic pressure; All of this meant that we had to act, and act fast, to turn Eskom around separation and reconnect with stakeholders, and he has done just that. the high levels of loadshedding resulting in demand not being met; the and set it back on the road to greatness. growing impact of embedded self-generation, mostly in the form of The main response to the operational challenges in Generation was the rooftop solar installations; and lastly, ever-increasing levels of electricity OUR RESPONSE development of a Board-supported, externally stress-tested Generation theft. The rise in illegal connections has necessitated the implementation To address these challenges, the Board agreed on six key focus areas: Recovery Plan with a stronger focus on EAF recovery, implementation of of load reduction to protect network equipment in affected areas from • Stabilising the leadership team and building a leadership pipeline which began in March 2023. We cannot expect this plan to start bearing damage caused by overloading. • Turning around operational performance to reduce and, ultimately, end fruit overnight. Since the end of the financial year, we’ve already observed loadshedding an improvement in the performance of the generation plant, thereby • Strengthening the balance sheet alleviating the severe burden of loadshedding and positively impacting • Executing the legal separation and securing Eskom’s rightful place in the sales volumes. The ongoing stability of the power system is testament changing electricity supply industry to the dedicated efforts of Eskom’s employees in implementing the Municipal arrear debt, R billion • Fighting crime, fraud and corruption Generation Recovery Plan and for that, we commend them. • Reconnecting with stakeholders While some may argue that you shouldn’t praise a fish for swimming, 74.4 we believe that it is essential to recognise the improvement and the First and foremost, we prioritised the appointment of strong and 58.5 progress made. We also need to acknowledge that Eskomites often inspirational leaders at all levels, who can motivate employees while have to swim upstream, navigating turbulent waters. The success of 44.8 also holding them accountable. These leaders must lead by example, Eskom’s turnaround plan rests on the ability to mobilise and rally Eskom by demonstrating a high-performance ethical culture and entrenching 35.3 Guardians behind the recovery of operational performance. This involves 28.0 Eskom’s values of Zero Harm, Integrity, Innovation, Sinobuntu, Customer looking after our people and driving a high-performance ethical culture 19.9 Satisfaction and Excellence. to improve employee morale. As part of that, we need to deploy 13.6 9.4 Following an extensive search, we believe we’ve found the right person to appropriate strategies to ensure that pockets of excellence are retained, 5.0 6.0 lead Eskom’s executive team, with Dan Marokane taking over as Group that performance improvement is recognised and rewarded, and that 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Chief Executive in March this year. We wanted someone who could hit underperformance can be dealt with. 24 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Message from the Chairman continued To address the network challenges, NTCSA will be executing the At the end of the day, Eskom must do everything in its power to collect On a personal level, I’m grateful for the guidance, insight and steadfast Transmission Development Plan to connect new generation capacity to all the revenue due and manage the costs within its control. We cannot perseverance shown by my fellow Board members. It hasn’t been an easy the grid, mostly from IPPs, to ease grid constraints in the country. It will continue to rely on government bailouts to save us. year, but we’re beginning to see the belief in Eskom and the commitment require building high-voltage transmission lines at an unprecedented pace. to its turnaround starting to pay off. However, with the support of the private sector and the availability of To address the outdated business model, we are executing the legal funding, we believe that it can be done, and NTCSA is working on making separation aimed at democratising and de-risking electricity generation. A special word of appreciation goes to the late Minister Pravin Gordhan this a reality. We’ve made progress on that, with NTCSA commencing trade on for his strategic guidance and unwavering support to restore Eskom’s 1 July 2024. NTCSA plays a pivotal role in the country’s evolving energy performance since taking over as Minister of Public Enterprises early in Dan will go into more detail in the GCE’s review of how we’re addressing landscape and in tackling the vertically integrated structure. It will 2018. It is truly regrettable that he did not get to enjoy a well-deserved the operational challenges and the results we’ve seen since year end. significantly contribute to addressing the energy trilemma by enabling retirement after a distinguished career serving our country. On behalf a secure, affordable and sustainable electricity supply industry. The of the Board, executives and staff, I would like to offer our heartfelt We are deeply grateful to National Treasury for the debt relief support unbundling of NTCSA is enabling Eskom’s purpose of powering South condolences to his family. We will continue to honour his legacy as we they’ve provided. It has contributed significantly towards addressing the Africa’s growth sustainably. rebuild a high-performing ethical Eskom. cash cost of the excessive debt burden and improving liquidity, thereby freeing up cash for critical maintenance and capital expenditure. That However, the separation of the Distribution business is lagging, driven Minister Kgosientsho Ramokgopa continues to play a pivotal role, not said, the debt relief cannot be seen as a silver bullet for achieving financial in part by the knock-on effect of delays in the Transmission process only in the improvement of Eskom, but also in the advancement of the sustainability by deleveraging the balance sheet. For that, we need cost- and other external dependencies. Going forward, the municipal debt broader energy landscape. The Minister is one of those rare leaders who reflective tariffs and a solution to the municipal arrear debt challenge, challenge has the potential to jeopardise the Distribution separation always gives credit to the team when things are going right. When things supported by a continued focus on cost efficiencies through improved as well as threaten the financial viability and sustainability of the future go pear shaped, as they often do, he takes personal responsibility. In my operational performance. Eskom has submitted a tariff application distribution industry. It is therefore imperative that we address this book, that is servant leadership. It is the kind of leadership we desperately to NERSA that aims for a correction of the tariff in compliance with challenge. need in all sectors of our society if we are to overcome the challenges NERSA’s methodology in the 2026 financial year, with more moderate our country is facing. annual increases thereafter. Calib will provide more information on that in We are actively pursuing our JET strategy and developing a pipeline the CFO’s report. of clean energy projects. Given the conditions associated with Dan has only been with us for a short time, but we can already see Government’s debt relief, we cannot do this on our own. We will need to the difference he has made with the support of Exco, with remarkable The two main issues keeping us awake at night are the unsustainable pursue partnerships, in terms of both funding and execution, to succeed progress on the priorities the Board set for him. We are confident that levels of municipal arrear debt, together with electricity theft, which in this area. he will effectively execute the organisational strategy and lead Eskom includes illegal connections, meter tampering and ghost vending. These back to greatness. We believe that the leadership layer is now well placed are arguably two sides of the same coin, as both speak to our values as a The Board and management have made a significant effort to understand to drive the organisation forward with a renewed culture of ethical high society and a general culture of lawlessness, where individuals can break the extent of the risk of crime, fraud and corruption that Eskom performance. the law without facing consequences. The Board is concerned about the is exposed to. We have challenged management to enhance their lack of compliance with the municipal debt relief programme, given that responsiveness and proactiveness by ensuring that the necessary controls Last, but not least, I must thank every Eskom employee for their the conditions of the programme prohibit Eskom from pursuing action are in place, and to implement effective consequence management. They contribution to turning the tide on loadshedding. As a Board, we against non-compliant municipalities. are dedicating significant time to creating the enabling structures and understand the need to retain high performers and that employees need engaging with employees on these matters. to be rewarded when they go above and beyond the call of duty. We will We must find solutions to these challenges – we have to collaborate be implementing appropriate incentive structures to drive performance in with Government, the municipalities themselves and society as a whole Ultimately, many of the actions we’re working on require policy changes the coming year. to ensure that this culture is addressed and that we are paid for our and a supportive legislative environment, so we cannot do this without product, with all participants in the electricity value chain paying their the support of Government and, in particular, the ministries with We must work together to face our challenges head on, to make today rightful share. We must put in place permanent measures to prevent oversight over Eskom’s operations. We greatly appreciate the invaluable better than yesterday, and tomorrow better than today. We have good a recurrence of earlier challenges once the programme comes to an support from the Minister of Electricity and Energy in this regard. plans in place, now we need to focus on execution. It is only through end. It is vital that we work closely with communities to look after continuous progress that we can restore Eskom to its former glory and our transformers, so that we don’t end up paying again and again to CONCLUDING REMARKS regain the trust of all our stakeholders. replace the same equipment when it is damaged by illegal connections. First of all, I want to thank Calib for doing a sterling job as acting Group Government has established a workstream under NECOM, focused on Chief Executive for most of the year under review. He stepped in without developing a sustainable distribution industry by addressing the legacy hesitation when asked to do so by the Board and just got on with the distribution challenges that have contributed to the energy crisis, including job while navigating significant challenges. We must also thank our the culture of non-payment. stakeholders, particularly the Government, for their continued support. Mteto Nyati Chairman 25 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Executive’s review Calib indicated last year that 2023 had been one of the toughest years OPERATIONAL RECOVERY Eskom had ever experienced, and then came 2024: arguably the toughest We want to deliver successfully on Eskom’s mandate to provide a year in Eskom’s history, from both an operational and financial perspective. reliable supply of electricity to the country by effectively operating and Even though I was an outsider to Eskom for most of the year under maintaining our infrastructure. Our immediate focus is to improve plant review, I felt Eskom’s pain in letting down the nation. It looked like the hard performance and manage unplanned unavailability to within acceptable work in the background was just not paying off, with seemingly constant levels to reduce and, ultimately, eliminate the need for loadshedding. loadshedding severely disrupting the lives of most South Africans. Irrespective of how you look at it, if the Eskom fleet does not perform, loadshedding will remain. Eskom faced ongoing generation supply shortages caused by poor performance of our power stations, with unplanned unavailability We will achieve this by improving the availability of the generation fleet averaging over 15 500MW for the year, or around 34% of total capacity. through the effective implementation of the Generation Recovery Plan This was exacerbated when coupled with delayed implementation of IPP which was conceptualised in March 2023. There is now a stronger focus programmes as well as lower-than-expected imports, as we simply could on EAF recovery by reducing unplanned capacity losses through extensive not use the coal-fired fleet to make up the shortfall. We lost an estimated planned maintenance, aimed at reaching an EAF level of 70% during the 13.2TWh in sales due to loadshedding, with another 13.9TWh estimated month of March 2025. This will be delivered through intensified efforts to to be lost through the impact of electricity theft. If you calculate the recover performance at the eight priority stations that contributed more revenue impact, that’s almost R45 billion lost to the bottom line from than 50% of unplanned load losses, thereby providing the biggest and those two factors alone. most immediate benefit to the system, while also sustaining performance at stations that already deliver reliable performance. Improvements have OCGT usage to stabilise the power system increased about 25% year- been achieved at most of the eight priority stations. on-year, which also had a devastating effect on the bottom line, with R33.9 billion spent on Eskom and IPP-owned OCGTs. Add to that the For several years now, Eskom has recorded disappointing environmental systemic challenges posed by Eskom’s high debt levels, above-inflationary performance. Relative particulate emissions were at the highest level in South Africa. The focus on ancillary plant performance, improved risk increases on our input costs and the continued cost of crime, fraud and decades, and water performance remains outside target. Both challenges management, spares availability, quality of outage execution and the corruption, together with the escalating municipal arrear debt and rising are due, in part, to the fact that we have been forced to operate the necessary skills has greatly assisted with the recovery in performance. electricity theft, and you can see why profitability took a severe beating generation plant outside sensible operating limits to respond to the high during the year under review. Calib will discuss these challenges in more levels of loadshedding experienced in recent years. Ongoing system Coal stock is very healthy at all power stations, safely above the grid code detail in the CFO’s report. constraints also provide little headroom to take plant out of service to minimum and Eskom’s tolerance levels. Most recently, only one station undertake the repairs required to improve environmental performance. had stock below its individual minimum level, but plans are in place to Despite Eskom’s commitment to the legal separation process under As part of the Generation Recovery Plan, we are focusing on ensuring address that. Coal supply is adequate, with future coal requirements Government’s Roadmap, progress was lagging due to delays in several that the necessary planned maintenance is undertaken. We have seen locked in where required. external dependencies. These included policy and regulatory changes some improvement in emissions performance since year end, but there required to enable the separation of the Transmission business to NTCSA. is a long way to go – you cannot reverse overnight the damage caused by To meet demand, we are implementing initiatives to recover units on years of neglect and overuse in an attempt to keep the lights on. long-term outage and increase available capacity by adding new capacity Eskom’s reputation continued to falter, very much influenced by the dismal to the grid. After suffering a failure to the west stack in October 2022, performance of the unpredictable and unreliable power system. Our Due to improved cash flow certainty provided by Government’s debt which took Kusile Units 1 to 3 (2 160MW) out of service for almost a continued reliance on massive government bailouts to counteract the relief programme, outage planning has improved, with funding for long- year, the units were returned to service using a temporary stack late in lack of cost-reflective tariffs, which drains an already constrained fiscus, lead spares and outages being released from operational cash flows the 2023 calendar year. The repairs to the permanent stack are expected contributed to this. We are acutely aware of the impact these factors have more timeously to allow proper planning. The concession we received to be completed by March 2025. The required outages on these units on inhibiting economic growth and employment opportunities, severely from National Treasury to allow us to work directly with OEMs greatly have been integrated into the plans under the Summer Outlook and are impacting businesses and the lives of all South Africans. assisted our efforts to improve the maintenance of the generation plant. not considered to pose any additional risk to the system. As Mteto indicated in the Chairman’s statement, the Board gave me Furthermore, strong leadership in Generation has also made a huge difference, with Bheki Nxumalo galvanising his team to focus single- We are also working on returning Koeberg Unit 2 (930MW) from the three priorities when I started: recovering operational performance to mindedly on recovering plant performance. The improved security long-term outage to replace the steam generators by early January 2025. reduce the frequency and intensity of loadshedding, which also benefits situation at the various power stations has also contributed. Kusile Unit 5 (799MW) was synchronised to the grid in December 2023 financial recovery; advancing the legal separation; and reconnecting with and achieved commercial operation at the end of June 2024. Unit 6 stakeholders. This must be seen against the backdrop of navigating a Successful execution of the Generation Recovery Plan, combined with (799MW), the final unit at Kusile, is expected to be synchronised to the changing Eskom – with the changing structure of the electricity industry interventions under the President’s Energy Action Plan overseen by grid by February 2025, with commercial operation around six months and Eskom’s energy mix; a change in people and skills being required; and NECOM, have led to a significant improvement in the reliability, efficiency later. Medupi Unit 4 (720MW) is also expected to return by the end of not least, addressing and adapting to the impact of climate change. and availability of the coal-fired generation fleet, ultimately benefitting March 2025 from an extended outage following a generator explosion. 26 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Executive’s review continued Where practical, we will continue to operate some of our older power Eskom continues to battle what we euphemistically refer to as non- that must underpin every action and decision we make. Given that, stations that were planned to be shut down earlier until 2030 to technical energy losses, which include electricity theft, illegal connections, I am saddened by the loss of five employees and contractors in Eskom’s supplement supply, given the economic imperative to mitigate the burden meter tampering as well as the purchase of illegal electricity tokens, service during the year under review. Even one death is unacceptable, and of loadshedding on the country. known as ghost vending. To address non-technical losses, we are we won’t be satisfied until each and every employee and contractor go converting conventional meters to smart prepaid meters, focusing on home to their families safely at the end of each day. Although the aim is to minimise the utilisation of OCGTs, peaking capacity those users most likely to be involved in the use of illegal tokens. To is designed precisely to provide power to manage the peak demand and support the smart meters and further improve the customer experience, An important element of fostering a productive workforce is having will be utilised as such. With the penetration of renewable energy, it the Distribution business will roll out advanced metering infrastructure in a constructive relationship with organised labour. For the first time in becomes even more important to manage the peaks and valleys in demand an aggressive manner over the next three years. We will urgently address more than a decade, the collective bargaining process during the 2024 that the power system experiences daily. Avoiding the use of OCGTs is the breakdown in controls which has resulted in the bulk generation of year resulted in an agreement without resorting to CCMA intervention. not necessarily the cheapest way to run the power system. Peaking power, illegal prepaid electricity tokens on Eskom’s online vending system. We This is testament to the strengthening of partnerships with Eskom’s although expensive, can offset mid-merit and base-load power that is are also prioritising illegal connections for normalisation through engaging recognised trade unions. The fact that this was done without disruption not needed to run 24/7. Loadshedding remains an essential tool for the community leaders, to encourage communities to play an active role in to the system during the critical winter period is worth the slightly System Operator to protect the grid. Although there has been a significant managing electricity infrastructure and the safe use of electricity. higher settlement than had been budgeted. The anticipated stability this improvement in generation performance, intermittent loadshedding may will bring is an investment in Eskom and the country’s future. After all, still be required should a significant event occur on the power system. While the focus is on step changes to enhance operational performance, Eskom’s interests and those of our workforce are inextricably linked – we cannot ignore the evolution of the electricity supply industry, which we are all striving for the sustainability of the business. Despite the suspension of loadshedding, Eskom continues to implement load necessitates the revision of our divisional business models to give effect reduction at local level when required to protect transformers overloaded to the aims of the Government’s Roadmap for Eskom by establishing Our people are critical to successfully achieving our mandate and strategic by illegal connections and ensure public safety. We urge our fellow citizens these entities as legally separate, sustainable businesses. Eskom also objectives. If the turnaround is going to succeed, we need a skilled to remember their own responsibility in ensuring uninterrupted supply by needs to start competing in the renewables space, and we are pursuing workforce, as well as appropriate levels of leadership and other critical engaging only in legal processes to acquire electricity. that through initiatives such as the proposed Tubatse pumped storage and scarce skills. We are identifying skills gaps and then closing those scheme, as well as renewables installations at our existing coal-fired gaps by training our people, maintaining a diversified learner pipeline and NTCSA is ramping up to expedite the expansion of the country’s enabling talent development opportunities, as well as recruiting where power stations, such as the 75MW solar plant at Lethabo which recently constrained power grid. This is necessary to increase grid capacity necessary to supplement skills. We also need to retain the talent that we received a generation licence from NERSA. Our gas strategy is gaining and ensure grid stability, to support the connection of much-needed have and recognise and reward their efforts in an appropriate manner. traction with our Richards Bay and other gas projects. new renewable generation capacity, the variability of which also poses We are reintroducing an incentive scheme in the 2025 financial year to do challenges to managing the system. We are exploring many interventions, PEOPLE AND CULTURE just that, with financial performance being the gatekeeper for the scheme including private sector participation, to increase the average transmission The 1:1:6:10 culture transformation programme was launched in 2022, and financial affordability one of the key determinants of the bonus pool. line build to 1 400km per year. The timely acquisition of servitudes, marking a return to Eskom’s core values to deliver a high-performance ethical This will ensure that we collectively focus on what is important to turn increasing contractor capacity, sourcing required materials and effective culture as a key enabler of the turnaround plan. The bureaucratic culture that Eskom around. project delivery will be required to deliver against these aspirations. has been embedded in Eskom limits innovation, adaptability and agility, all of We will also incorporate the lessons learnt from the capital expansion which we desperately need to deal with the rapid change that we’re facing. Eskom again paid production bonuses to frontline staff this year. We programme and State Capture to ensure that the same mistakes are believe the benefit to the business is clearly evident, both operationally not repeated when executing the Transmission Development Plan. The A critical component of building a high-performance ethical culture and financially. As a result of the latest winter challenge, which ran from increased capital budget allocation for the next five years will advance is creating opportunities to engage and remain connected to the 1 April 2024, we’ve seen a reduction of close to 4 000MW in unplanned the implementation of the Transmission Development Plan and asset business and one another. In my first 100 days in office, I made a point unavailability, coupled with more than R13 billion saved on diesel for renewal. A total of 47 projects will enable the connection of 37GW to of connecting with more than 10 000 Eskom Guardians. Employees OCGTs compared to the 2024 financial year. It goes without saying that the grid, starting in 2026 and ending in 2033. need to have a sense of belonging and to remember our common goals the impact on the economy of not loadshedding is immense. We’ve also and interconnectedness, to ensure that we are all striving for the same observed an improvement in employee morale, and more employees are To modernise the distribution grid and sustain network performance, outcome – to turn around Eskom by improving plant performance and willing to go the extra mile to turn around performance. In my view, we Distribution plans to construct around 4 000km of medium- and high-voltage thereby, making loadshedding a thing of the past. have reason to be proud of the team that got us to this point. lines during the next five years. The allocation of capital to the division has been increased accordingly over that time. It will also need to develop new In our quest to be better, we must not forget about safety: it starts Soon after I joined, I announced a new Exco structure, which aims to and additional revenue streams to contend with the addition of embedded and ends with every one of us. Each of us bears the responsibility for address existing business challenges and embed operational recovery, self-generation mostly in the form of rooftop solar installations, leading to promoting and implementing a culture of safety. Zero Harm is not just while also future-proofing Eskom by positioning the organisation for customers reducing their reliance on or defecting from the grid. about avoiding accidents: it’s about fostering a culture of care, vigilance growth and long-term sustainability. The revised structure includes a and responsibility. Safety is not just a priority, it’s a fundamental value combination of existing and new roles to enable responsive decision- 27 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Executive’s review continued making required to deliver on our strategic initiatives. It will enable LEGAL SEPARATION Eskom firmly intends to play its part in accelerating the reforms of navigation of the rapidly changing environment in which we operate, So far, our legal separation process has taken much longer than envisaged the trading rules to enable a competitive energy marketplace. Eskom including the expansion of Eskom’s renewable energy portfolio in line in Government’s Roadmap to transform the electricity supply industry supports a rules-based transition, to create a sense of order as we with our ambition to increase our clean technology portfolio to support issued in October 2019. Despite several delays, I am immensely proud that navigate our way through these reforms. After all, current rules are our Just Energy Transition strategy. The structure further focuses on NTCSA achieved operationalisation in July 2024. It is proof that together premised on assumptions of which the very relevance comes under capacitating forensic investigations and addressing crime, fraud and we can co-create an energy industry that is future-ready and aligned to pressure with the reforms, therefore the need to reform the rules too. corruption, together with executing the legal separation activities. global best practice to deliver energy security. The operationalisation of The aim is to position Eskom to deliver value within broader national NTCSA is a significant step towards modernising South Africa’s energy efforts to transform the electricity supply industry. However, the business We have consolidated the forensics, security and investigative sector, ensuring energy security and attracting investment. cannot remain as vast as it was in the past; we must transition from functions into a single investigative unit, to be established as the Group being a monopoly within the rules governing the sector. It is up to us Investigations and Security (GIS) function, which will have the additional We are grateful for the support and collaborative efforts of all key to deliver value to our customers and remain a key player in the sector, mandate of driving the implementation of recommendations from stakeholders, including Government and lenders, that enabled us to reach thereby maintaining our market share, as we increasingly compete in a investigations. The function will report directly to me. this momentous milestone. decentralised and democratised industry. I have made some key appointments in this regard, with new heads of NTCSA will play a pivotal role in the country’s evolving energy landscape We will continue to engage transparently with lenders and other key the GIS function, Corporate Services, Strategy and Sustainability, Group and in breaking the vertically integrated business model. Globally, the stakeholders on the legal separation process and associated timelines, as Capital, Information and Technology as well as Strategic Delivery having legal separation of previously vertically integrated utilities creates a we shift our focus to the separation of the Distribution and Generation joined us recently. We welcome them aboard and look forward to their pathway to enhanced competition and transparency in the energy sector. businesses towards the desired end state. Next on the agenda is the contribution to turning Eskom around. This is driven primarily by the aim to create energy security, which is operationalisation of NEDCSA. However, if the municipal debt challenge critical for inclusive economic growth. The Transmission System Operator is not resolved, it has the potential to jeopardise the Distribution Once again, Eskom has received a qualified audit opinion relating function, which must be in place within five years of the Electricity separation, by threatening the financial sustainability and viability of to information disclosed under the PFMA. Although we have well- Regulation Amendment Act being promulgated, will allow producers, NEDCSA. established policies and procedures in place, in support of a sound consumers, traders and retailers to engage in energy trading, thereby and effective internal control environment, compliance remains the enabling competition and driving efficiency. While the exact form of the FINAL THOUGHTS primary challenge. We are driving a renewed sense of commitment and Transmission System Operator is being finalised, NTCSA will fulfil this We are in an incredibly exciting industry at a moment of tangible change. discipline to improve internal controls, to proactively address the risk of role in the interim. Eskom’s role is absolutely central to the country’s economy, and we are circumvention of controls and prevent recurrence of audit findings. the Eskom’s Guardians. When we ensure stable electricity supply, we In preparation for a competitive electricity market, Eskom initiated an enable business and industry, job growth and, ultimately, solutions to the Despite this, we must accept that it will take time for efforts to pay off internal market simulation between Eskom Generation’s power stations to improve internal controls across the organisation. Efforts have also social ills that the country faces. and Eskom Distribution. This allowed us to test market principles and been somewhat fragmented due to the priority of addressing operational operations without exposing the parties to market risk. challenges, further hampering consequence management, but establishing the GIS function is expected to go some way towards streamlining our efforts. We appreciate the ongoing support of law enforcement agencies to deal with matters involving crime, fraud and corruption – we cannot tackle these challenges alone. As much as I’m a champion of people, I also need to challenge our people Fix the current business Prepare for competition Modernise the power system Transition responsibly and hold them accountable when things don’t go right. We need to deal Pursuing financial and operational Facilitate a competitive future Leverage technology Striving for net zero emissions sustainability energy industry by 2050 with poor performance and other unacceptable behaviour, including lack of compliance with controls, as a matter of urgency. That said, there are Recover EAF to 70% by Obtain NERSA approval for Accelerate TDP execution, Accelerate repowering and March 2025 unbundled tariffs including alternative funding repurposing initiatives at Komati, many ethical people in Eskom; the delinquent few cannot be used to NTCSA trading by July 2024; models Grootvlei, Hendrina, Camden, judge the ethical majority. Reduce municipal arrear debt and Arnot and Kriel re-base costs operationalisation of NEDCSA Develop the distribution network, My call to employees is simple: be solution-orientated, embrace the fast- by April 2026 and Generation including smart meters and Collaborate with Government on Improve controls to address crime, changing environment in which we operate, drive high ethical standards, thereafter microgrids optimised MES compliance fraud and corruption and acknowledge and appreciate our importance to the country. We Accelerate clean energy project Use data analytics to create value Participate in distributed energy Improve leadership stability and need to reclaim the hearts and minds of the nation, not by talking, development and enhance decision-making resources and drive eMobility skills development, and entrench a but through our actions. We got through the winter period without Fine-tune Generation and Increase flexibility of power system (electrical vehicles and charging high-performance ethical culture infrastructure) loadshedding, now let’s get through summer! Distribution business models infrastructure 28 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Executive’s review continued When we consider the performance for the six months ended The reduction in unplanned unavailability of our generating plant has 30 September 2024, performance at our coal-fired power stations has resulted in more than 250 days without loadshedding, with disciplined shown tremendous improvement, leading to the easing of generation execution of reliable maintenance under the Generation Recovery Plan supply constraints, with no loadshedding during the period and year- starting to bear fruit. This has also had a positive impact on financial on-year savings in OCGT costs of almost R12 billion. As a result, Eskom performance, not only for Eskom but also for the nation – predictions experienced growth in sales and revenue which, coupled with the suggest that the ongoing suspension of loadshedding can contribute to reduction in primary energy costs, had a hugely beneficial impact on economic growth of around 2%. It will also boost investor confidence, financial performance. This, together with the debt relief support by which will generate investment in many sectors. Government and the 12.74% tariff increase for the 2025 financial year have led to a significant improvement in liquidity. We understand that this improvement is the result of immense hard work, sacrifice and unwavering dedication by Eskom Guardians and During the half-year period, Generation plant availability increased others who support us, who spent time away from families and friends. significantly, largely due to a significant decrease in unplanned We appreciate their commitment to securing our economy and the breakdowns and losses. Due to the improvement in liquidity, generation opportunities this can bring to every citizen. outage performance has improved, with long-lead spares funding being released in full and the remainder of the outage funds having been I have always maintained that Eskom Guardians are among the best in the released. Relative emissions performance has also shown considerable world: it was a key factor in motivating me to return. I felt a strong drive to improvement. As mentioned earlier, we successfully commercialised play my part in helping the world to see the true calibre of our people and Kusile Unit 5, adding 799MW of installed capacity to the grid. how we can turn around the business and build a culture of performance. We need a collective effort to deliver results and create a different Eskom It is clear that Eskom’s performance has turned a corner, and the outlook that will survive another 100 years. When we work together to follow our for the 2025 financial year is very positive indeed. processes and execute our plans, we deliver results that define the future of South Africa. Eskom is proving that it is worthy of future investment to The solutions to fix our challenges reside within the employees of this serve the nation and drive economic growth. organisation, and those who have raised their hands to assist us. The challenges we face are greater than just Eskom, and we need new thinking The spotlight of this nation shines firmly on our performance for one to resolve them. We are privileged to have an engaged Board to steer us very clear reason: When Eskom keeps the lights on, the economy can towards a brighter future. grow and, in turn, create jobs and opportunity. The success of the nation depends on each one of us playing our part, every day, and on our We must fix the current business to permanently end loadshedding, leaders providing us with the direction, vision and guidance to succeed in and talk about where the business is going, to set Eskom up for a a challenging environment and an ethical high-performance culture. future of powering this nation. To do so, we must rethink our business model to prepare for competition, modernise the power system and, Remember, if it is to be, it is up to us! ultimately, transition responsibility to net zero emissions by 2050 through our JET strategy. While we are making progress in turning Eskom around, we are also focusing on the future through the legal separation process. In the aftermath of state capture, we need to clean up our act and make sure Dan Marokane we leave behind an institution that can all be proud of. Group Chief Executive 29 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Financial Officer’s commentary 2024 FINANCIAL RESULTS NOTABLE ITEMS Let me begin by addressing the elephant in the room. We acknowledge DISPOSAL OF TRANSMISSION TO NTCSA that we are facing significant financial challenges, having recorded an The Transmission Division was transferred to NTCSA, a after-tax loss of R55 billion (2023: R26.1 billion). This resulted primarily wholly owned subsidiary of Eskom, on 31 March 2024 as part from a once-off adjustment to derecognise Eskom’s deferred tax asset of a common control transaction within the group. There relating to unused assessed tax losses. However, I’m pleased to report was no impact on the group’s financial performance for that we’ve improved on both EBITDA performance and the loss before the year. The disposal was accounted for at carrying value, tax for the year. transferring assets of R85.2 billion and liabilities of R32.3 billion. Major contributors to the movement in the loss before tax Furthermore, NTCSA recognised a shareholder loan from Eskom of R34.2 billion, which represents Transmission’s portion R billion of debt securities and borrowings from third party lenders (34.6) 36.3 (16.9) (25.5) held by Eskom, together with a current account of R3.5 billion receivable from Eskom relating to the merger agreement. The carrying value of the investment in NTCSA was R22.2 billion at 31 March 2024. Refer to note 12 in the financial statements for (6.6) further detail. NTCSA also recognised a liability with a fair value of R10.3 billion in its separate financial statements relating to (2.8) (1.4) 0.5 an upstream financial guarantee to Eskom for third-party debt secured by its assets. DERECOGNITION OF DEFERRED TAX ASSET 14% 11% 30% 9% 4% Following the disposal of Transmission, a recoverability Loss Revenue Primary Repairs Employee Net Other Loss assessment of Eskom’s deferred tax asset concluded that it is before tax energy and benefit finance before tax unlikely that the remaining business in the Eskom company will (2023) maintenance cost cost (2024) Electricity theft resulted in estimated non-technical losses of 13.9TWh generate sufficient taxable income over the next five years to (around 8% of sales) at a cost of supply of R6.4 billion. The financial utilise unused assessed tax losses. This is despite the company Year-on-year income growth Year-on-year cost growth impact is even greater when considering the associated revenue lost. expecting to return to a tax paying position within the next Primary energy costs are mostly subject to changes in the production five years. Therefore, we derecognised a deferred tax asset of Revenue increased significantly on the back of an 18.65% standard tariff mix, with higher production from OCGTs, IPPs and imports to augment R36.6 billion in terms of IFRS Accounting Standards, although increase under NERSA’s MYPD 5 determination. However, we were supply, leading to associated cost pressures. We also spent R28.7 billion this has no impact on Eskom’s right to utilise unused assessed unable to recognise R17.2 billion (around 6% of revenue) due to the high on repairs and maintenance, 30% higher than the prior year, to address tax losses against future taxable income. Refer to note 14 in the risk of non-collectability from some municipal and residential customers. plant performance challenges and improve plant reliability going forward, financial statements for further detail. Of this, R8.3 billion was subsequently recognised as revenue on a cash in line with the Generation Recovery Plan. PRIOR YEAR RESTATEMENT basis once received. The increase in employee costs is attributable to a 3% growth in In the prior year, certain changes in the measurement of The potential for additional revenue growth was hindered by a 3% headcount and the implementation of a 7% cost-of-living adjustment for environmental restoration and closure provisions were decline in sales volumes. This was caused by ongoing Eskom and IPP bargaining unit and managerial employees. The managerial adjustment incorrectly credited to profit or loss instead of being deducted generation supply shortages; demand-side factors, such as depressed included a discretionary portion to retain high performers and correct from the cost of the related assets. The income statement and economic conditions and the increased prevalence of embedded self- income differentials. As Mteto mentioned in the Chairman’s statement, statement of financial position have therefore been restated, generation by customers; as well as escalating levels of electricity theft. we are reimplementing performance incentives for our people in resulting in equity decreasing by R2.1 billion at 31 March 2023. the coming year. We expect the performance gains from motivated Refer to note 48 in the financial statements for further detail. Supply shortages are particularly detrimental to profitability and liquidity. employees to far outweigh the cost of these incentives. To avoid or minimise loadshedding, we had to rely heavily on expensive LEVIES TO BE REFUNDED BY SARS OCGTs, which cost us R33.9 billion for the year, averaging approximately Net finance costs continue to be the second largest expense due SARS previously disallowed Eskom’s claims for fuel levy refunds R650 million per week. When supply constraints persist, it becomes to our unsustainable gross debt balance of R412.2 billion. Like many on diesel used to generate electricity. The dispute was resolved necessary to implement loadshedding and load curtailment, leading to organisations and households, we’ve been impacted by global interest in October 2024, with an amount of R9.2 billion being payable lost sales. An estimated 13.2TWh (around 7% of sales) could not be rate pressures, raising our average cost of debt to 10.90%. However, by SARS to Eskom. This amount will be recognised in the 2025 supplied to customers during the year. Sales would have declined by up to market expectations suggest that interest rates will reduce as monetary financial year as it is a non-adjusting event. 1% more if we hadn’t increased use of OCGTs beyond budgeted levels. policy is gradually eased in line with global trends. 30 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Financial Officer’s commentary continued Over much of the past year, I was fortunate to experience Eskom from ADDRESSING REVENUE COLLECTION CHALLENGES operating cash flows to fund Eskom’s capital structure, largely because a unique perspective as acting GCE, after previously serving as GCFO. Government has intensified its efforts to address this systemic problem of an inadequate tariff path. We’ve been successful in challenging During this time, I gained a deep appreciation for the link between through the municipal debt relief programme, which was implemented during NERSA’s decisions over recent years, on the basis that NERSA has not finance and operations. While the financial results for the year under the year. The programme aims to improve payment levels of municipalities, implemented the MYPD methodology consistently. review remain disappointing, it is encouraging that we recorded a lower thereby enhancing Eskom’s revenue collection and operating cash flows over loss before tax despite the momentous operational challenges we faced. time. Despite a strong uptake, municipalities representing over 80% of the The Electricity Regulation Act, 2006 as amended requires the regulator I believe that we’ve reached a turning point and that the 2024 financial arrear debt being targeted for write-off are failing to comply with the most to enable an efficient licensee to recover the full cost of its licensed year will be remembered as the year in which we laid the foundation for basic condition of paying their current accounts on time. activity, including a reasonable return proportionate to the risk of the Eskom’s future success. licensed activity. This means that the allowable revenue determined must Due to the low level of compliance, arrear municipal debt continued to be sufficient to cover the prudent and efficient costs incurred to supply FINANCIAL RECOVERY INITIATIVES escalate to unsustainable levels, growing by 27% to R74.4 billion at year end. electricity to customers, while providing a fair return on assets that at We can only place Eskom on a more sustainable footing by collectively More recently, we’ve observed a concerning trend of non-payment or late least covers our cost of capital. recovering both financial and operational performance. Dan has already payment by metros in Gauteng, which typically used to pay on time. discussed the operational aspects in the GCE’s review, so I will focus on Historically, Eskom has not received a return commensurate with the our financial recovery. We’ve requested National Treasury to engage with non-compliant level of debt and associated financing costs. Furthermore, any business municipalities to correct their behaviour or to remove them from the would price its product to cater for costs associated with bad debts Four key challenges threaten Eskom’s return to profitability and long-term programme so that we may resume legal proceedings and debt recovery and losses due to theft, but past revenue decisions have not adequately financial sustainability. Firstly, we must contain controllable cost increases processes. catered for these risks. by improving operating performance, driving cost-efficiency initiatives and stopping the leakage from crime, fraud and corruption. Secondly, we have We’re also working closely with those municipalities willing to collaborate We’re monitoring developments in the regulatory landscape, including to improve revenue collection by dealing with non-paying customers. on finding sustainable solutions. Most recently, we entered into a NERSA’s approach to the revision of the pricing methodology. We raised Thirdly, we require a reasonable return on assets by migrating towards a distribution agency agreement with Maluti-a-Phofung, our second largest serious concerns on the practicality of implementing NERSA’s proposed cost-reflective tariff path. Lastly, we need to lower debt service costs by debtor, to take over revenue collection on their behalf and assist them electricity price determination methodology rules and we’re pleased that deleveraging our balance sheet. Each of these challenges poses a risk to with service delivery. NERSA has rescinded its decision. We’re watching this space closely, as our liquidity, with a knock-on effect on operational performance. the lack of a clear, cost-reflective tariff path, combined with uncertainty On the other hand, Emfuleni, our third largest debtor, has repeatedly around the pricing methodology, pose a risk to financial sustainability and As an example, liquidity constraints in recent years led to the delayed release failed to comply with the conditions of the programme. This required the development of financial strategies – not just for Eskom, but also for of funds for long-term outages, hampering plant performance and execution us to obtain a court order to attach their bank accounts and collect the our customers. of the Generation Recovery Plan. Government’s debt relief support has revenue directly. Emfuleni has since entered into a distribution agency provided certainty in meeting our debt servicing obligations, giving us the agreement as well, to enable the release of their bank accounts. We’ve submitted our MYPD 6 revenue application to NERSA, which headroom to make funds more readily available for operating requirements translates to proposed tariff increases of 36.15%, 11.81% and 9.10% for To enhance our operating cash flows and liquidity, it’s critical that we 2026 to 2028. The application includes a gradual increase in Eskom’s return and release funds for capital expenditure three years in advance. resolve the systemic challenge of arrear debt. We need to collect the on assets, to minimise the impact to consumers and enable the migration As a result of improved liquidity, we’ve been able to more effectively revenue owed to us and take steps to prevent future accumulation of towards cost-reflectivity over time. The return on assets that we’ve implement and manage our operational recovery plans, capital debt by municipalities. The fact is, we cannot carry the financial burden factored into the application amounts to 4%, 5% and 6% over the three expenditure programmes and working capital requirements. This has caused by municipalities any longer, without placing Eskom’s financial years, which is still well below our cost of capital of around 11%. We await enabled us to improve coal stock levels and procure long-lead spares and sustainability and operations at serious risk. the public consultation process before NERSA makes its determination. consumables. As we’re beginning to see in the 2025 financial year, this, Despite our best efforts to enforce our legal rights to collect the revenue We believe that the migration to cost-reflective tariffs is a crucial step in turn, has a positive impact on operating performance, which should due to us, we cannot resolve this challenge alone. While we acknowledge – not just for Eskom’s financial sustainability, but to foster a competitive ultimately lead to improved operating cash flows. that there is no one-size-fits-all solution, we believe that more stringent future electricity supply industry. This will encourage investment and Since year end, we’ve established a programme to enhance operational measures are required as defaulting municipalities are undermining enable market players to operate and maintain their assets in a reliable efficiency and reduce costs, which aims to see Eskom return to Government’s efforts to address the energy crisis. Failure to address this state. An inadequate tariff path will once again constrain Eskom’s financial profitability in the short to medium term. Much of the additional savings challenge will nullify the benefits of the debt relief and may require further position and lead to insufficient investment in sustaining and expanding we’re targeting will be through primary energy optimisation, procurement reliance on financial support from Government beyond March 2026. our infrastructure, perpetuating previous operational challenges. efficiencies, digital transformation and capital productivity, together with revenue growth opportunities. THE NEED FOR COST-REFLECTIVE TARIFFS We’ve also proposed a revised retail tariff plan for the restructuring The lack of cost-reflective tariffs has been a key contributor to Eskom’s of electricity tariffs to better address the generation, transmission and poor financial performance. In part, the unsustainable level of debt distribution activities of supply. Existing tariff structures do not accurately accumulated over the past two decades is a symptom of insufficient reflect the true component costs of supply, particularly the allocation 31 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Chief Financial Officer’s commentary continued between fixed and variable costs. Simply put, pricing needs to be investment grade level, all three rating agencies have assessed Eskom’s production, achieving year-on-year efficiencies of more than R10 billion in modernised to address the restructuring of the electricity supply industry outlook as either stable or positive on the basis that our creditworthiness the first six months of the 2025 financial year. and the realities of the changing energy landscape. will continue to benefit from Government’s support. I remain optimistic that these wins will facilitate a possible return to DELEVERAGING ESKOM’S BALANCE SHEET The conditions of the debt relief restrict capital expenditure to profitability in the short to medium term. That said, I’m also keenly aware While we generate surplus operating cash flows, they are severely transmission, distribution and certain generation activities as well that we’re operating in an environment of complexity and uncertainty. constrained by the challenges affecting revenue and operating costs that as prohibit new borrowings during the debt relief period, unless I’ve touched on. This leaves us with insufficient cash flows to support our written permission is granted by the Minister of Finance. This means While liquidity has improved on the back of the debt relief and better highly leveraged capital structure on a standalone basis. that operating cash flows must improve to fund capital expenditure operational performance, and will improve even further with the requirements, given the restriction on new borrowings. recovery of the amount due from SARS, we aren’t yet where we want Government’s debt relief support has been vital in meeting our debt to be. To achieve financial sustainability, we have to resolve the systemic servicing obligations and improving liquidity. We’ve fulfilled all conditions Ultimately, we must reach a position where we can service debt financial challenges we face around the tariff path and escalating municipal necessary for the R76 billion support received in the 2024 financial year obligations without further support. Our debt balance is expected to arrear debt. to be converted from a shareholder loan to equity. reduce by around 40% to a more sustainable level of R250 billion over Outlook for the 2025 financial year the next five years. However, National Treasury has acknowledged that Looking forward, we expect to receive R64 billion in the 2025 financial the debt relief alone is not enough to enable Eskom’s long-term financial Sales volumes Tariff increase Operating year and R40 billion in the 2026 financial year, followed by the direct sustainability; it must be supported by appropriate tariff increases and a 2–3% higher 12.74% expenditure takeover of up to R70 billion in debt servicing (principal and interest) by sustainable solution to the municipal debt challenge. 20–30% higher Government thereafter. Altogether, the amended debt relief package will provide R250 billion in support. FINAL THOUGHTS OCGT spend Primary energy costs Debt servicing As Dan indicated, we’re beginning to turn the corner when it comes 60–80% lower 10–20% lower requirements Credit rating agencies have acknowledged the importance of this support to the performance of our generation plant. We haven’t implemented 5–15% lower in addressing our balance sheet and liquidity challenges. We’ve received loadshedding since 26 March 2024, which has led to higher sales and rating upgrades from Moody’s and S&P Global during the past year, while an improved revenue outlook compared to the 2024 financial year. Fitch has affirmed its previous rating. Although our ratings remain at sub- Furthermore, we’ve substantially reduced our reliance on OCGT EBITDA Cash flows for the year ended 31 March 2024 R85 billion–R95 billion (2024: R43.4 billion) Debt service cover ratio 295.8 0.90–1.10 (2024: 0.46) Gross debt/EBITDA ratio 5.00–6.00 (2024: 11.58) 173.7 Primary energy Arrear municipal debt balance R95 billion–R110 billion (2024: R74.4 billion) Debt relief of To close, I must express my gratitude to the Chairman, Board, Exco and R76 billion our employees for their unwavering support while I served as acting 35.1 Employee benefits received from GCE. Even though we continue to face many obstacles, our collective Government to Debt raised comprising: 13.6 Working capital Total debt address Pre-funding from March 2023 of R16 billion teamwork has helped us rise to the challenge despite the many conflicting 33.0 Repairs, maintenance and other servicing debt servicing Drawdowns from existing DFIs of R7.5 billion demands and trade-offs we have to deal with. I believe in the power of R89.8 billion outflows (255.4) of hope, and I’m confident that we have what it takes to change our 40.4 44.9 circumstances for the better and, ultimately, ensure Eskom’s long-term 4.5 10.9 16.1 sustainability. 54.6 18.4 23.6 76.0 35.3 Revenue Operating Operating Capex Balance Debt Interest Government Balance Debt Other Net outflows surplus and other before debt repaid repaid debt relief before raised funding cash Calib Cassim investing servicing funding activities movement Group Chief Financial Officer 32 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our strategic and risk landscape Our strategy and turnaround plan 34 Integrating risk and resilience 39 33 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our strategy and turnaround plan OUR STRATEGIC CONTEXT Consequently, our focus for the next two to three Considering the trends discussed earlier and the years will be executing Eskom’s turnaround plan, challenges and opportunities presented by the which is aimed at improving financial and operational evolving energy sector, it is evident Eskom will performance and driving the legal separation, while continue to play a significant role in the electricity also positioning the organisation for the transition Strategic supply industry. To ensure optimal participation, to a low-carbon future. In positioning Eskom for the objectives the subsidiaries to be established through the legal future, deliberate focus will be placed on aligning separation process must transform their business future investments and aspirations to the ambitions of Fix the current and financial models to remain relevant in a changing Eskom and its future subsidiaries. business Turnaround JET objectives Level of focus energy landscape. While the transformation of objectives Accelerate Prepare for these models is needed, this must be conducted in a Our long-term goal is the financial and operational repurposing and competition responsible manner that supports our mandate. sustainability of Eskom, while responding to the Operations recovery repowering of stations developments in an evolving energy sector. We need Implement an Modernise the Acknowledging that Eskom finds itself in a very to work in synergy with a multitude of stakeholders Financial recovery integrated socio- power system dynamic context, our strategy is being reviewed to to create a sustainable electricity system for South People, culture economic strategy ensure the focus remains on addressing the most Africa, which will serve as a catalyst for powering and ethics Actively pursue Transition significant changes in our operating context. growth and prosperity for the region. In the short renewable energy responsibly to medium term, we need to improve operational Legal separation allocation One of the drivers of the strategy review is the performance to contribute towards ending updated Strategic Intent Statement issued recently loadshedding, as well as overcome those challenges Short term Medium term Long term by the then Department of Public Enterprises. It sets hampering our financial sustainability. The immediate out Government’s expectation of Eskom’s strategic interventions must turn around performance to set direction over the medium term. The expectations are: the organisation on a path to sustainability. Decarbonisation Decentralisation Democratisation Digitisation • Execute the legal separation process with clear target dates for the National Electricity In conjunction with the immediate focus on delivering Distribution Company of South Africa (NEDCSA) against the objectives of the turnaround plan, we will being operationalised by the 2026 calendar year also prepare for the energy transition. By driving a Just Energy Transition (JET), Eskom will be enabled • Continued focus on EAF recovery and addressing to address many of the immediate challenges in the primary energy challenges to resolve the energy short term, while ensuring long-term growth and crisis, combined with greater focus on ash facilities sustainability. to manage ash removal and storage • Develop, maintain and expand the transmission As the country works towards navigating the energy and distribution networks, with an added trilemma of ensuring energy security, energy equity requirement for NTCSA to identify and pilot (access and affordability) and energy sustainability, projects to address grid capacity constraints, over Eskom will contribute to the interventions outlined and above existing initiatives in the Energy Action Plan driven by the Minister of • Greater focus on people through skills Electricity and Energy together with NECOM. We development and succession planning within the will support South Africa’s energy transition and context of a changing electricity supply industry Government’s policy direction for the future energy • Drive economic transformation and localisation sector, to deliver on our vision of “sustainable power through leveraging procurement spend, while for a better future.” enhancing Eskom’s broader corporate social responsibility The initial outcome of the review indicates that the strategic direction will not change, but that adjustments to strategic goals and the pace of execution are critical success factors. 34 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our strategy and turnaround plan continued OUR STRATEGIC OBJECTIVES The turnaround plan emphasises addressing the lack of accountability and consequence management, non-compliance with safety standards, environmental compliance obligations and housekeeping, non-adherence to established policies and procedures, poor operational practices, and lack of discipline, as well as improving leadership quality, stability and continuity throughout the different leadership layers. Tackling crime, fraud Fix the current business Prepare for competition Modernise the power system Transition responsibly Pursuing financial and operational Facilitate a competitive future Leverage technology Striving for net zero emissions and corruption remains a priority, with a focus on ensuring awareness sustainability energy industry by 2050 and that identified incidents are timeously investigated, while driving the close-out of investigations and cases both internally and externally. Recover EAF to 70% by Obtain NERSA approval for Accelerate TDP execution, Accelerate repowering and March 2025 unbundled tariffs including alternative funding repurposing initiatives at Komati, models Grootvlei, Hendrina, Camden, PREPARE FOR COMPETITION: FACILITATE A COMPETITIVE Reduce municipal arrear debt and NTCSA trading by July 2024; FUTURE ENERGY INDUSTRY operationalisation of NEDCSA Develop the distribution network, Arnot and Kriel re-base costs The entry of additional private generators increases competition, by April 2026 and Generation including smart meters and Collaborate with Government on Improve controls to address crime, thereafter microgrids optimised MES compliance particularly for the Generation and Distribution businesses. However, fraud and corruption this increase in variable-type generators provides opportunities for Accelerate clean energy project Use data analytics to create value Participate in distributed energy Improve leadership stability and Eskom to participate in the emerging market by providing the flexible development and enhance decision-making resources and drive eMobility skills development, and entrench a (electrical vehicles and charging base-load capacity that will be required to complement the intermittent high-performance ethical culture Fine-tune Generation and Increase flexibility of power system infrastructure) nature of renewable energy. The draft IRP 2023 provides a view of the Distribution business models infrastructure technologies that are required for a viable future energy mix. Eskom intends to participate in the renewable technology options set out in the IRP and, therefore, careful planning is being undertaken about the FIX THE CURRENT BUSINESS: PURSUE FINANCIAL AND While the debt relief support provided by National Treasury will support capability of the current fleet to participate in new markets, the required OPERATIONAL SUSTAINABILITY our turnaround efforts and provide much-needed funding towards market rules and future technology options. This objective focuses on fixing the current business, with a particular transmission and distribution infrastructure over the medium term, the focus on operational recovery, financial sustainability and, most ongoing challenges related to municipal debt have reached critical levels, The legal separation of the Transmission, Distribution and Generation importantly, ensuring a high-performance ethical culture among all with municipal arrear debt at R74.4 billion at year end. The culture of businesses is ongoing. Although the Transmission licence has been employees. From a financial perspective, our MYPD 5 (Multi-Year Price non-payment by municipalities is undermining Government’s efforts to received, delays in the licensing process and other external dependencies Determination) revenue application received a generally positive decision ensure that Eskom becomes financially sustainable, and as such, requires have set back the Distribution separation timelines. The establishment from NERSA, and Government’s debt relief package of R250 billion is a more sustainable solution. Under the municipal debt relief programme, of a Transmission System Operator in line with Government’s Roadmap helping to deleverage our balance sheet. With this financial support, we technological solutions and engagements with various stakeholders is critical for the sustainability of the electricity supply industry. Enabling can address some of the operational challenges which were driven by are being prioritised to find a sustainable solution to the outstanding additional generators and establishing the market platform will attract financial constraints. However, the MYPD 6 will also require a positive municipal debt. Other major drivers contributing to sub-optimal financial much-needed private investment in the generation and distribution outcome from NERSA as our effective tariff is still suppressed. performance include below-cost-reflective tariffs, declining sales volumes, sectors while reducing reliance on Government’s already-constrained increased cost of production particularly with regards to OCGT costs, balance sheet. Stakeholder consultations on the ERA Amendment Bill Consequently, we are intensifying efforts to recover plant availability significant debt servicing obligations, as well as the impact of crime, fraud and market code provided an opportunity for key stakeholders to raise (EAF), return units that are on long-duration outage as well as procure and corruption. concerns, but also to understand some of the dynamics impacting the additional capacity. Initiatives to improve EAF and reduce unplanned future market model and market rules. load losses through an intensive reliability maintenance programme The success of our turnaround plan rests on our ability to mobilise and will be delivered through the execution of the Generation Recovery rally our people behind the recovery of operational performance with a Outdated business models are being revised to ensure we respond Plan. Additional generating capacity is critical to create the space focus on improving EAF to 70% in March 2025, optimising debt collection appropriately to the changing environment. This will enable the needed to execute outages in a highly constrained system. This will be systems and limiting municipal debt growth, while also creating enabling distributed nature of the electricity supply industry, specifically the supplemented by demand-side management interventions through the processes and partnerships to support the required grid expansion. establishment of a Distribution System Operator to manage and implementation of industrial energy efficiency campaigns and initiatives This involves embedding a high-performance ethical culture to improve coordinate distributed generation, as well as the provision of ancillary aimed at residential customers to reduce the gap between demand employee morale, by deploying appropriate reward and retention services to the Transmission System Operator to secure the power and supply when required to support a constrained system. strategies to ensure that pockets of excellence are retained, and that system. underperformance and unethical behaviour is dealt with. 35 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our strategy and turnaround plan continued MODERNISE THE POWER SYSTEM: LEVERAGE TECHNOLOGY reduce our greenhouse gas emissions through a well-controlled Just The evolution of the electricity supply industry and connection of Energy Transition, while avoiding investment of more than R340 billion large-scale renewable and distributed energy generators require in emission control equipment. In May 2024, the then Minister of DFFE significant strengthening and expansion of transmission and distribution subsequently issued a decision favourable to the continued operation of infrastructure, in line with the requirements of the Transmission our power stations subject to certain conditions. Development Plan (TDP), which are cascaded into Distribution’s Network Development Plan (NDP). Over R100 billion has been In our pursuit of sustainability, we will focus on driving the most optimal allocated over the next five years towards addressing the infrastructure pathway for our generation fleet while balancing energy security, requirements across the Transmission and Distribution businesses to affordability and sustainability. Given the energy crisis and the delay in new invest in modernising the grid and upgrading technology, although this is IPP capacity being connected to the grid, we will continue operating four dependent on an adequate tariff being awarded by NERSA. of our older coal-fired stations (Camden, Hendrina, Grootvlei and Arnot) to 2030. This is in line with the draft IRP 2023, which proposes that, where To ensure that the expansion of the transmission grid is not a constraint to technically and commercially feasible, continued operation of adding more generation capacity in the short to medium term, innovative coal-fired power plants should be considered to retain dispatchable ways of unlocking grid capacity are being considered, including curtailment, capacity. In parallel, through the JET strategy, we will roll out several optimised grid connection processes, prioritising key transformer upgrades, projects at coal-fired power stations for the repowering and repurposing and public private partnerships to enable faster progress. In the distribution (R&R) of these stations to mitigate the associated socio-economic impacts sector, innovative solutions like virtual wheeling, microgrid solutions and on affected communities of the eventual ramp-down of the coal industry. bi-directional metering will be implemented through increased investment in the distribution network, together with the introduction of new THE JET STRATEGY products and services to meet prosumers’ needs. These initiatives will The JET strategy seeks to balance the three elements of the energy unlock opportunities for additional revenue streams to compensate for the trilemma – energy security, affordability and sustainability – while defection of traditional consumers. providing a second life to power stations for continued economic stability to the country, although this also comes at a financial cost. Our IT strategy is focused on solutions to improve billing and customer interactions to improve revenue collection, reduce non-technical losses and enhance the customer experience. Internally, the strategy will also focus on improving Eskom’s control environment through the implementation The energy trilemma in a nutshell of a robust fraud analytics platform to identify fraudulent activities as Energy security is essential for economic growth; it is not limited well as controls to prevent cyber-security breaches to prevent losses to to balancing supply and demand, but also takes into consideration the organisation. Blockchain technology use cases are being investigated quality of supply in an evolving energy landscape. to manage spending, promote transparency and control fraudulent transactions in the supply chain of different goods and services. The second leg of the trilemma refers to energy affordability and access, which is especially important considering South Africa’s TRANSITION RESPONSIBLY: STRIVE FOR NET ZERO triple challenge of unemployment, inequality and poverty. The Just EMISSIONS BY 2050 Energy Transition must deal with this crisis through ensuring cost- The Climate Change Act, 2024 sets out the framework for the regulation of effective technology options that represent the least cost solutions greenhouse gas emitting sectors to reduce greenhouse gas emissions and in the context of the other two elements of the trilemma. achieve the ultimate goal of net zero by 2050. Energy sustainability refers not only to air quality and low-carbon Techno-economic indicators show that the life extension of ageing power generation capacity responses, but also to how we will manage stations is not a viable strategy in the long term, given the extraordinarily scarce natural resources, such as water, biodiversity and waste high cost of prolonging the life of old power stations, which includes the management, and the effective upgrades of the grid for alternative significant cost of environmental compliance, coupled with the impact on capacity. This third leg of the trilemma includes an economic South Africa’s export competitiveness, and the resulting negative impact on sustainability lens, informing what can be locally and regionally made, our industrial and commercial customer base. what will need to be imported, what dependencies will be beneficial We are working with the Department of Forestry, Fisheries, and the to the techno-social and economic targets being pursued, and what Environment (DFFE) to align on an optimal solution for South Africa new markets can be accessed as future growth areas. and Eskom to meet the Minimum Emissions Standards (MES) and 36 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our strategy and turnaround plan continued The figure below highlights the five E’s informing the strategic elements of the JET and how efforts need to expand beyond mitigation Challenge Initiatives to include adaptation and economic sustainability to ensure the transition is indeed just. Accelerating the • Exploring transition funding to supplement Equity addition of new Eskom’s limited financial resources and Economy Employment generation Catalyse reskilling of staff and financing options, by mobilising domestic and Contribute to the reindustrialisation Create new high-quality jobs through capacity communities to ensure an equitable foreign finance to enable investments in JET of South Africa by providing sufficient repowering and repurposing initiatives transition through training centres infrastructure, while adhering to the conditions of clean generation and catalysing new with focus on Mpumalanga and repurposing projects tailored to the debt relief package renewable energy-based industries each community • Unlocking partnerships with the private sector to mobilise new streams of finance 3 • Accelerating the execution of JET projects, including generation projects 4 Addressing • Limiting the impact of rising carbon import tariffs 2 challenges and related policies among key trading partners Energy related to could place a significant proportion of South Ensure equitable access to Environment emissions Africa’s exports at risk, due to the reliance on a clean, sustainable energy Reduce GHG emissions coal-dominant power system by unlocking new energy and water consumption, • Benefitting local communities through improved sources and strengthening contributing to South environmental conditions resulting from a the national grid Africa's sustainability goals reduction in emissions of particulate matter, fugitive emissions, as well as sulphur dioxides (SO2) and nitrogen oxides (NOx) 1 5 • Designing and enabling a lower national carbon emissions pathway • Introducing lower-carbon and cleaner-energy projects and infrastructure to reduce South Africa’s dependency on high-carbon emission energy sources Transitioning in a socially and economically responsible manner is or needed capacity on the grid. The strategy details financing and • Achieving a net-zero power sector by 2050 will underpinned by the global effort to mitigate climate change, and the partnership options that are available to support the execution of the reduce carbon emissions by about 76% shift in policy and technologies towards lower-carbon economies in JET and sets out the socio-economic impact, including the estimated net Reducing • Repowering and repurposing power stations, compliance with the Paris Agreement. Given South Africa’s commitment growth in jobs by 2050. socio-economic reskilling and creating job opportunities in the to the Paris Agreement, the country has chosen to be part of the effects on The shift to renewable technology will require extensive upgrade and execution of JET projects transition to a low-carbon, socially inclusive future, and Eskom is communities supportive of and fully aligned to this position. modernisation of South Africa’s transmission and distribution grid. While • Working with Government and other NTCSA and Distribution implement their respective development stakeholders to stimulate economic activity in The revised JET strategy is placed explicitly within the context of the plans, JET will leverage a wide spectrum of projects and initiatives to affected regions ongoing energy crisis and the generation strategy, and supports the catalyse the transition in Mpumalanga, given the scale of our coal-based short-term continued use of operational units at older coal-fired stations, operations in this province. without life extension, while decoupling R&R efforts from station operation and decommissioning schedules. Continuing R&R projects The JET strategy is aligned to the strategic goals, assumptions and at stations, regardless of shutdown date, will support the need for direction of Eskom's 2035 strategy. Furthermore, JET directly addresses alternative projects to be operational before the coal shutdown date some of the key challenges that Eskom faces. is reached, without delaying new economic and social opportunities 37 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our strategy and turnaround plan continued DELIVERING THE STRATEGY The Eskom strategy map indicates how we plan to deliver on our mandate by driving the initiatives that will be prioritised in executing the strategy. Finances Commercial mandate Social and environmental mandate Long-term financial sustainability Positive impact on South Africa's GDP Customers Reliable energy and energy services Enabler to a competitive South Contributor to socio-economic Reputable and ethical business Clean and responsible organisation provider African electricity supply industry transformation Improve Improve Prepare for Modernise the Transition operations finances competition power system responsibility Internal processes Increase efficiency and availability of Increase revenue – reduce Operationalise system and Strengthen and expand transmission Improve air quality – SO2 , NO2 , coal plant municipal debt market operators and distribution networks particulate matter Reduce costs – fuel, oil, coal, Offer ancillary services and Grid enhancing technologies Reduce non-technical losses Electrify communities inventory, procurement distribute energy to the market including smart meters Achieve optimal restructured Drive JET strategy – reduce carbon, Improve skills development Develop clean energy pipeline Increase flexibility of generation mix cost-reflective tariff uplift communities Create ethical, high- Ensure stable quality Reduce fraud, corruption Implement digital business Improve procurement Drive procurement socio- Cross cutting enablers performance culture leadership and criminality transition processes economic transformation Optimised pathway Partnerships and Enablers Advocacy support from Support for sustainable Cost-reflective tariffs Continued integration MES indulgence and Collaboration with law for localisation and funding support from Minister of Electricity municipal debt solutions and tariff restructuring and advocacy support streamlined EIA process enforcement agencies industrialisation from national and global and Energy from government support from NERSA from NECOM support from DFFE dtic entities 38 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Integrating risk and resilience We are committed to effectively managing risk and resilience, which is DISASTER RISKS essential for Eskom’s sustainability. This is important, given the vital role Strategic risk appetite and Shaping our Disaster risks are those risks inherent to our operations that have a we play in the South African economy, our impact on society and the risk of strategy future through relatively low likelihood of occurring and generally have adequate controls options strategy environment, and the ongoing transition of the energy sector. Ultimately, development in place to address them but would have a significant consequence should we strive to be a risk-intelligent and resilient organisation, to ensure the Scanning our Risk of they materialise. environment achievement of our strategic objectives and contribute to a safer and strategy We manage 11 national disaster risks through our Enterprise Resilience misalignment more resilient society. and critical INTEGRATED AND PROACTIVE STRATEGY assumptions Programme, which caters for disaster management as well as emergency The appropriate management of risk and resilience ensures that we can Emerging risk DEVELOPMENT AND preparedness. Individual Exco members take accountability for risk and strategic effectively formulate and execute our strategy, operate our business with risk profile EXECUTION Planning monitoring and response planning for each of these risks. minimal disruption, respond to and recover from disruptions should they strategy execution materialise, as well as proactively leverage opportunities as they arise. Monitoring National blackout Drought or water-related disaster and adjusting Risk of It is, therefore, imperative that risks that impact our strategic objectives our direction execution Severe supply constraint Environment or climate disaster are proactively identified, consistently managed and continuously Nuclear incident Solar or geomagnetic storm monitored, and that the necessary structures and plans are in place to Economic or financial collapse Pandemic respond to and recover from incidents that threaten our ability to create OUR RISK LANDSCAPE Cyber-attack or critical systems Terrorism or political instability and preserve value. As part of our strategy development and execution, we regularly conduct failure a scan of our environment to identify changes in our operating context National industrial action We manage risk and resilience throughout Eskom and its subsidiaries and risk landscape because of global and local developments. using an integrated approach, which conforms to industry standards. Our Integrated Risk Management Standard is aligned to ISO 31000 Risk management – Guidelines, King IV, Government’s Risk and Integrity  efer to “Considering our operating context” from page 17 for further IR R We continue to ensure compliance with the Disaster Management Management Framework for SOCs, the Disaster Management Act, 2002 information Act, 2002 and manage our response to major threats and disruptions as well as the requirements of our annual shareholder compact. through our resilience command centres. Technical and non-technical The following risk factors have been identified at a global and local level, vulnerabilities are continuously reviewed. During the year, the disaster In terms of King IV, the Board has overall responsibility for the oversight risk related to a severe supply constraint was expanded to include higher based on our most recent scan. The potential for disruption to our and governance of risk. The Board approves the Enterprise Risk and levels of load reduction through loadshedding stages 9 to 16, as set out business activities, and the consequences thereof, inform our approach to Resilience Management Policy and Plan, together with the group’s risk in the third edition of NRS048-9, which deals with load reduction and risk and resilience management and the treatment of emerging risks. appetite and tolerance levels, which outline the level of risk that we are system restoration under power system emergencies. willing to assume in pursuit of our strategic objectives as we navigate our GLOBAL RISKS financial, operational and structural challenges. Simulation exercises are conducted regularly to ensure that Eskom Geopolitical Economic can continue to operate and recover within a reasonably short time Energy supply Cost-of-living The Audit and Risk Committee (ARC) maintains oversight of the overall instability and slowdown or in the event of serious incidents or disasters. By January 2024, we crisis crisis risk management process on behalf of the Board, while individual Board conflicts recession had completed all six scheduled grid exercises, in line with Grid Code committees provide oversight of relevant risks affecting their areas of requirements. Severe generation supply constraints continued to affect Cyber-security focus. As an example, the Business Operations Performance Committee Climate change our operations during the year, although the risk of a national blackout Food supply threats and Public health (BOPC) considers risks related to operational performance and oversees and extreme remains low due to the interventions in place. crisis attacks on critical emergencies the effectiveness of operational interventions, as well as addressing both weather events infrastructure the operational and strategic changes due to the industry reforms. A national simulation exercise based on an extreme weather event LOCAL RISKS is planned for the 2025 financial year. Extreme weather related When it comes to managing risk and resilience, management is the to snow, heavy rains, thunderstorms, strong winds, veld fires and first line of defence. As such, the day-to-day management thereof is Inadequate High floods pose a risk to our infrastructure and may lead to a loss of delegated to Exco, supported by its Risk and Sustainability Committee. infrastructure Crime and Inequality and unemployment supply to customers. Exco addresses the key priorities and deliverables of the Enterprise Risk and service violence social unrest and Resilience Management Plan and monitors risk performance and rate delivery emerging risks on a quarterly basis, in line with the Board-approved risk Investor SR For more on our approach to enterprise resilience, refer to “Integrated appetite and tolerance levels. The assessment of risk appetite as well Governance and Commodity price Political sentiment on risk management – Resilience” in the sustainability report as strategic and emerging risks forms part of our strategy development corruption fluctuations uncertainty emerging markets process, as depicted below. 39 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Integrating risk and resilience continued OPERATIONAL AND STRATEGIC RISKS We assess operational risks across each area of the business based on the magnitude of the consequence and the likelihood of occurrence. Following that, our operational risks are aggregated into strategic risks across several risk categories, covering finance; operations (Generation, Transmission and Distribution); environment and climate change; people, culture and safety; information technology; legal and compliance; and stakeholder management. These categories are aligned to the Board’s risk appetite and tolerance levels and accountable owners are assigned to each risk. Key risk indicators (KRIs) are in place for all risks, serving as a set of leading indicators to ensure that risks are managed proactively and to understand the direction in which risks are moving, and at what rate. The KRIs reflected in the table are assessed to determine if they are operating outside of our risk appetite and tolerance levels, and are considered either acceptable ( ), tolerable ( ) or unacceptable ( ). All KRIs have treatment plans in place, as successfully treating these risks is paramount to our future success. Related Related material turnaround Material matters Risk appetite statement Strategic risk description Key risk indicators matters objectives M1 Enhancing financial sustainability Finance High appetite to return to Our financial sustainability remains compromised by revenue shortfalls arising EBITDA M2 Improving operational stability M1 M2 M6 FR OR PCE profitability at a group level and from NERSA’s revenue and regulatory clearing account (RCA) determinations, EBITDA margin hold positive cash balances resulting in below-cost-reflective tariffs. This is exacerbated by delays in NERSA’s Free cash flow M3 Recovering environmental performance across all legal entities decisions and the recovery of RCA balances. Furthermore, Eskom continues to Capital expenditure experience declining sales volumes, operational challenges resulting in increasing Government support M4 Addressing climate change costs, non-payment by customers and escalating municipal arrear debt, together with the effects of crime, fraud and corruption. Poor financial performance also impacts operational sustainability M5 Restoring leadership stability Nevertheless, the risk to financial sustainability, liquidity and our status as a going M6 Ensuring adequate skills concern has improved due to Government’s debt relief support. The debt relief is intended to address our high levels of debt and is subject to strict conditions, M7 Fulfilling Eskom’s developmental mandate non-compliance with which will require us to repay the subordinated loan at market rates M8 Focusing on governance, compliance and Operations: Generation ethics High appetite to provide reliable Operational performance has been hampered by poor generating plant Energy availability M1 M2 M3 FR OR PCE electricity by delivering on the performance, poor quality of outage execution, unreliability of new generating factor M9 Combatting crime, fraud and corruption Generation Recovery Plan and units, coal-related challenges and water plant challenges at certain power stations. Coal stock levels M4 M6 LS other initiatives to end This frequently results in system constraints and the perceived risk of a national (number of stations M10 Executing the legal separation loadshedding. This will be blackout, causing a decline in stakeholder confidence. This is exacerbated by risks below minimum achieved by operating the plant to the Koeberg long-term operation (LTO) project as well as the potential loss of levels) efficiently and safely through a our licence to operate due to poor environmental performance and non- Power station water Turnaround objectives skilled and competent compliance with environmental laws and regulations, which may lead to the reservoir levels workforce, while remaining shutdown of generating plant and/or litigation Koeberg LTO project FR Financial recovery mindful of limiting environmental schedule harm. Generation will further An unfavourable MES decision from the Minister of DFFE may lead to the Particulate emissions possible shutdown of non-compliant power station units, with an immediate OR Operations recovery leverage opportunities through Committed MES partnerships towards becoming impact of 16GW, and a total impact of 30GW by April 2025 – a situation that projects on schedule a cleaner producer of electricity, would be untenable for South Africa’s economy. After year end, the Minister PCE People, culture and ethics thereby enabling South Africa’s issued a decision favourable to the continued operation of our power stations aspiration of net zero emissions in May 2024, subject to certain conditions LS Legal separation by 2050 40 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Integrating risk and resilience continued Related Related material turnaround Risk appetite statement Strategic risk description Key risk indicators matters objectives Operations: Transmission High appetite to provide a reliable and efficient Failure to provide adequate transmission infrastructure to integrate new generation sources Installation of new transmission lines and transmission network, System Operator and energy timeously, caused by a lack of resources and delays in statutory approvals, may lead to transformers M1 M2 M9 FR OR PCE market service in South Africa and designated inadequate electricity supply to the country. Furthermore, the inability to arrest the incidence Number of severe security incidents LS electricity markets, as well as to protect the national and severity of theft, vandalism and other security incidents affecting transmission assets may Number of armed security incidents M10 grid using load reduction and loadshedding as control lead to operational disruption and financial losses measures, to ultimately prevent a national blackout. The legal separation of Transmission experienced delays against the original timelines, caused This will be achieved through the implementation of by a lack of alignment with stakeholders as well as external dependencies. The the Transmission Sustainability Improvement Plan, implementation of a competitive market is dependent on various external dependencies, which incorporates the TDP including enabling policy, amendments to legislation as well as a regulatory framework. NTCSA commenced trading on 1 July 2024 Operations: Distribution High appetite to power economic growth through the An increase in energy losses, caused by electricity theft, illegal connections, meter tampering, Energy losses distribution of reliable electricity and related energy illegal vending, theft and vandalism of network equipment, as well as errors, result in revenue Trend of local sales M1 M2 M9 FR OR PCE services to customers in a sustainable manner. loss. This is exacerbated by regulatory uncertainty and below-cost-reflective tariffs arising Payment levels (all customers including Furthermore, we aim to improve revenue collection from a regulated tariff structure that leads to misalignment between how costs are incurred municipalities) through a focused financial recovery programme for and recovered. Furthermore, Distribution’s financial sustainability is compromised by escalating SAIDI financial sustainability arrear debt due to the non-payment of municipal bulk accounts, as well as decreasing sales volumes. Reduced funding and capital investment may lead to an inability to sustain network performance within regulatory norms Environment and climate change High appetite to comply with relevant environmental Deteriorating environmental performance and non-compliance with laws and regulations Environmental legal contraventions legislation and reduce our negative impact on the could result in the loss of our licence to operate, the shutdown of generating plant, litigation, Particulate emissions M1 M2 M3 FR OR PCE environment through emissions and discharge environmental degradation, penalties and fines Greenhouse gas emissions LS pollution, as well as to make a positive impact on Eskom may fail to transition from a coal-based power system to a lower-carbon and Water use performance M4 water conservation, air quality and biodiversity climate-resilient company due to obstacles on the net zero pathway and no allocation to Red data bird mortalities High appetite to mitigate greenhouse gases, safeguard Eskom of low-carbon technology in South Africa’s revised Integrated Resource Plan, leading to our infrastructure from adverse climatic changes and a failure to invest in an optimal combination of clean technologies to achieve reductions in shape sustainable development best practices by CO2 emissions. This is exacerbated by the competing objectives of ensuring security of supply implementing climate change adaptation strategies and electricity affordability, as well as technological limitations which limit the rate at which Eskom and South Africa can transition People, culture and safety High appetite for ensuring the health and safety of Health and safety may be compromised by failing to effectively implement occupational health Employee and contractor fatalities employees, contractors and members of the public, in and safety improvement initiatives, which may lead to harm (injuries, fatalities or damage to Lost-time injury rate (LTIR) (employees) M5 M6 M7 FR OR PCE accordance with our value of Zero Harm, by the environment, equipment or property), thereby decreasing productivity and damaging our LTIR (contractors) eliminating fatalities and reducing injuries. reputation. Furthermore, the inability to fulfil our societal, legal and moral duty to protect the Combined total recordable incidence rate M8 M9 Furthermore, there is no appetite to negatively affect health and wellbeing of those affected by our operations may lead to potential harm to the (including first aid and medicals) human health public, as well as legal, reputational and financial risks Public recordable fatal incident rate and High appetite for a skilled, competent, ethical and Critical workforce skills not being available as required by the strategic workforce plan may reduction of public fatalities high-performance organisation by embedding an lead to a reduction in productivity levels and an inability to achieve business objectives. Percentage of identified successors with innovative culture and accountable leadership Furthermore, the potential lack of a speak-up culture in response to ethical issues, caused by a development plans lack of trust and fear of victimisation, may result in the perpetuation of an unethical culture Percentage achievement in proficiency levels in operations over a three-year period Employee engagements Organisational culture 41 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Integrating risk and resilience continued Related Related material turnaround Risk appetite statement Strategic risk description Key risk indicators matters objectives Information technology High appetite to lead the direction of Exposure to malicious activities and cyber-security attacks may affect critical business systems and lead Percentage availability of critical information M1 M2 M8 FR OR PCE information technology proactively and to legal, operational and financial implications. Furthermore, potential server room interruptions, caused technology systems (infrastructure and holistically, while enabling, empowering and by inadequate backup power supply during unplanned power outages, may lead to system downtime, applications) M9 co-creating innovative technology solutions in data corruption or loss, damage to critical infrastructure and disruption of operations Number of successful data breaches or losses support of our strategic intent with legal, operational and financial implications (including operational technology) Legal and compliance No appetite for any non-compliance with The inability to provide advice or independent assurance of our compliance maturity status, caused by Adequacy of performance compacting of M1 M2 M3 FR OR PCE compliance obligations, or to compromise on inadequate time and resources dedicated to compliance activities, may lead to delays in effectively compliance resources and time spent on compulsory requirements or voluntary addressing any inadequacies in the management of existing compliance obligations, thereby increasing compliance M7 M8 M9 commitments, which may cause harm to the the risk of contraventions Management of obligations (understanding organisation. Furthermore, there is no and controlling obligations and monitoring appetite for unethical conduct, crime, fraud Compliance with certain areas of the PFMA has been a challenge in recent years: the misstatement of effectiveness of compliance) and corruption in general irregular expenditure as well as fruitless and wasteful expenditure and losses due to criminal conduct Management of identified breaches resulted in a qualified audit opinion. Furthermore, instances of crime, fraud and corruption, if not brought under control, may negatively impact the organisation and our reputation further Unethical behaviour, undue influence on procurement practices, ineffective controls, non-adherence to controls, as well as inadequate internal monitoring and oversight to prevent, detect and correct unethical or non-compliant behaviour, may lead to financial losses, operational disruption, reputational damage and deterioration of our ethical culture Stakeholder management High appetite to restore our reputation and Failure to sufficiently assess and proactively respond to stakeholder expectations, as well as inconsistent Media tonality decrease M1 M2 M3 FR OR PCE role in society, by enhancing our stakeholder communication and lack of transparency, may impact stakeholder trust and lead to the loss of relationships Media share of voice management capability, proactively aligning with key stakeholders. This will impact the organisation on multiple levels, putting achievement of our Stakeholder sentiment LS M4 M5 M6 our approach to stakeholders’ expectations strategic objectives in the short, medium and long term at risk. Furthermore, our brand and reputation C SI beneficiaries and ensuring better organisational may be affected by stakeholders conveying negative perceptions of the organisation M7 M8 M9 performance. This is underpinned by an effective, efficient, timeous and integrated From a socio-economic perspective, the inability to achieve the targeted number of beneficiaries for M10 communication plan corporate social investment (CSI) initiatives, due to budget constraints and delays in the implementation of planned projects, may negatively affect our reputation in the communities in which we operate Effective stakeholder management influences the outcomes of all material matters 42 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Governance and ethics Report by the Board 44 Report by the Audit and Risk Committee 46 Assurance and control environment 47 Report by the Business Operations Performance Committee 48 Report by the Governance and Strategy Committee 49 Report by the Human Capital and Remuneration Committee 50 Remuneration of directors and executives 51 Report by the Investment and Finance Committee 52 Report by the Social, Ethics and Sustainability Committee 53 Promoting an ethical culture 54 43 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Board for the year ended 31 March 2024 DIRECTORSHIP AND ATTENDANCE PURPOSE • Conclusion with the shareholder of the shareholder compact and The Board fulfils the primary roles and responsibilities of a governing body addendum for the 2024 financial year Number of meetings 1 22 outlined in the Companies Act, 2008, the PFMA, 1999 and King IV by: • Quarterly shareholder reports submitted to the shareholder covering the Directorship at year end • Setting the strategic direction of the organisation and treating strategy, performance of the Eskom group against the agreed shareholder compact Chair: Dr Mteto Nyati2 20/22 risk, performance and sustainability as inseparable • Proposed shareholder compact for the 2025 financial year submitted • Providing oversight through an effective governance framework and to the shareholder Mr Dan Marokane3 1/1 approving policies and plans that enable implementation of Eskom’s • Eskom’s Corporate Plan for the 2025 to 2029 financial years submitted Mr Calib Cassim 4, 7 18/19 strategy to the shareholder and National Treasury Ms Fathima Gany 19/22 • Monitoring management’s performance and implementation of the • Submission of requests for approval to the shareholder for the strategy, ensuring accountability and promoting integrity of reporting implementation of performance-based remuneration adjustments for Mr Lwazi Goqwana 22/22 • Overseeing the identification and management of compliance employees, as well as the reinstatement of short-term and long-term Mr Clive le Roux 21/22 requirements and risks through effective internal controls, supported incentive schemes for employees Ms Ayanda Mafuleka 19/22 by a risk-based internal audit function • Submission of various transactions requiring PFMA approval to the • Promoting a high-performance ethical culture aligned to Eskom’s values shareholder Mr Leslie Mkhabela 19/22 and operating as an ethically, socially and environmentally responsible • Recommendation to the shareholder of non-executive directors for Dr Tsakani Mthombeni 19/22 corporate citizen appointment to the board of the National Transmission Company Mr Bheki Ntshalintshali 22/22 South Africa SOC Ltd (NTCSA) KEY ACTIVITIES AND DECISIONS • Key resolutions for Transmission’s legal separation, including Ms Tryphosa Ramano 17/22 The Board considered and/or approved the following key matters, many recommended changes to Eskom’s and NTCSA’s MOIs Dr Busisiwe Vilakazi 21/22 of which were considered and recommended to the Board by its • Resolutions on the implementation of the merger agreement between committees: Eskom and NTCSA, the implementation plan and timelines for the legal Dr Claudelle von Eck 22/22 • Power system outlook for the winter and summer periods separation of Transmission and commencement of trade of NTCSA Former directors • Matters raised in the public domain by the former GCE, Mr André • The intercompany loan and related transactional documents for de Ruyter. The Board mandated management to commission an the legal separation of Transmission, including amendment of the Mr Mpho Makwana 2 17/17 independent inquiry into allegations of fraud and corruption. Refer to Government Support Framework Agreement for IPP contracts Dr Rod Crompton5 22/22 “Promoting an ethical culture” from page 54 for further information transferred to NTCSA Mr Martin Buys6, 7 18/18 • Recruitment process for the GCE and recommendation of the • As shareholder of NTCSA, approved the upstream guarantee for candidate shortlists to the shareholder NTCSA on recommendation from the NTCSA board 1. The number of meetings excludes workshops and other engagements where • Appointment of the Group Executive: Generation • Solvency and liquidity test for Eskom and NTCSA following the attendance is not formally recorded. 2. Mr Mpho Makwana resigned as Chairman of the Board on 30 October 2023. • Eskom’s revised delegation of authority, which was subsequently NTCSA transaction Thereafter, Dr Mteto Nyati took over as Chairman of the Board. implemented from 1 June 2024 • Terms of the merger agreement and subscription agreement between 3. Appointed as GCE from 1 March 2024. • Results from the independent board evaluation, a summary of which is Eskom and the National Electricity Distribution Company of South 4. Served as acting GCE from 24 February 2023 to 29 February 2024. Returned to the covered under “Board evaluation” from page 45 Africa SOC Ltd (NEDCSA) position of GCFO from 1 March 2024. 5. Resigned as a non-executive director on 27 February 2024. • Eskom’s revised Just Energy Transition (JET) strategy • Submission of the due diligence report for a possible new Eskom 6. Served as an executive director, in the position of acting GCFO, from 21 March 2023 • Several power purchase agreements and proposals relating to holding company for consideration by Government to 29 February 2024. Returned to the position of General Manager: Financial and various projects Management Reporting from 1 March 2024. 7. Three meetings were held for non-executive directors only. This is reflected in the • Group annual financial statements compiled on the basis of the going BOARD COMMITTEES lower number of total meetings for executive directors. concern principle, together with the integrated report, sustainability The Board is supported by six committees to ensure effective execution report, management representation letter and the decision not of its responsibilities, namely the: to declare a dividend to the shareholder for the year ended • Audit and Risk Committee (ARC) IR Refer to page 13 for further information on the composition of the Board 31 March 2023 • Business Operations Performance Committee (BOPC) • Group interim financial statements and interim performance • Governance and Strategy Committee (GSC) commentary for the six months ended 30 September 2023, including • Human Capital and Remuneration Committee (HCRC) the adoption of the going concern principle • Investment and Finance Committee (IFC) • Status of external audit findings and recommended remedial plans to • Social, Ethics and Sustainability Committee (SES) be implemented by management 44 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Board continued Authority is delegated to these committees without diluting the Board’s The average scores (out of 5) achieved by the Board across each of the At the time of this evaluation, the Board had served for less than a year. own accountability. The Board reviews and approves the terms of seven dimensions are shown below: The Board was appointed on 1 October 2022 against the backdrop of an reference of these committees annually, to define their composition, exceptionally difficult period in Eskom’s history, following the introduction mandate, roles and responsibilities. 4.00 “The composition of the Board is a healthy and varied mix of professional skills and experience … of the Energy Action Plan by President Cyril Ramaphosa in July 2022 to address South Africa’s energy crisis. This necessitated the Board’s All Board committees are comprised of and chaired by independent Board Demographically, the composition is a positive one” involvement in operational matters, beyond its strategic oversight role. non-executive directors. When required, the GCE, GCFO and other composition executive members of management attend committee meetings Regrettably, the Board’s relationship with management was negatively as officials. During the year, the Board considered and/or approved information, opinions, recommendations, reports and statements from its 4.50 “Board members are generally passionate about their role, not only to Eskom but to the country affected by leadership instability following the departure of the former GCE, Mr André de Ruyter, in February 2023, together with several vacant Board … They felt empowered to carry out their board committees, as detailed under the key activities of the respective Board responsibilities responsibilities” executive positions. The recent appointment of Mr Dan Marokane as committee reports that follow. GCE and the return of Mr Calib Cassim to the GCFO position under FUTURE FOCUS AREAS 3.55 “The Board is committed and aware of the need to not only create awareness around various a permanent employment agreement have contributed to improved leadership stability. The Board continues to focus on filling vacant The Board has identified six priority focus areas which are being driven Ethical legislation and documents associated with ethical executive positions and succession planning for executive management. through the activities of its committees: leadership leadership, but to also systematically institutionalise it … Finding means and ways to The need for a high-performance ethical culture and the inadequate • Stabilising the leadership team and building a leadership pipeline cascade an ethical culture into the operating application of consequence management were highlighted as areas for (HCRC) models and systems at Eskom” improvement by the Board, together with the need for frequent meetings • Turning around operational performance to reduce and, ultimately, end and the length, quality and lateness of submissions to the Board and its loadshedding (BOPC) • Strengthening the balance sheet (ARC; GSC; IFC) 3.21 “The Board, owing to the complexity and problems they walked into, had a high frequency of committees. Board meetings meetings during the review period” • Executing the legal separation and securing Eskom’s rightful place in the Despite these challenges, Mazars noted positive development across all changing electricity industry (cross-cutting for all committees) seven dimensions and concluded that the Board is well capacitated in • Fighting against crime, fraud and corruption (ARC; SES) 3.67 “The Board is strong on discussions relating to Eskom’s financial management and the relevant terms of skills and diversity, and equally positive and committed to driving change across the organisation to effect a positive impact on the country. • Engaging with stakeholders (GSC; SES) Sustainability interventions that need to be put in place … Similarly, the Board conducts sufficient deliberation The Board is focused on ensuring that internal structures and processes BOARD EVALUATION through its committees on environmental and are fit-for-purpose to support its strategic oversight role, and that Although principle 9 of King IV recommends that board evaluations social issues” management is capacitated and enabled to drive Eskom’s turnaround. be performed every second year, Eskom conducts a board evaluation annually in line with DPE’s SOC Board Evaluation Framework to support the Board’s continued improvement. 2.95 “The Board’s relationship with management was greatly affected by the contentious exit of the Relationship former GCE … The Board, alongside the acting with GCE, are trying to work in an otherwise abnormal During the year, the Board undertook an independent evaluation of its management situation” effectiveness over the period 1 September 2022 to 31 August 2023. The evaluation was conducted by Mazars Advisory Services (Pty) Ltd (Mazars) and considered the effectiveness of the Board and its committees across seven dimensions. Board members also completed peer reviews and self- 3.57 “The Board has desired to be known as an “engaged board” … The Board has yet to meet all Stakeholder stakeholders owing to time constraints as a result evaluations, with evaluation reports prepared for each Board member in engagement of the significant operational challenges and their addition to the report covering the Board as a whole. short tenure” 45 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Audit and Risk Committee (ARC) for the year ended 31 March 2024 MEMBERSHIP AND ATTENDANCE KEY ACTIVITIES DURING THE YEAR • Feedback on the implementation of Eskom’s digital business transition and The committee considered the following and, where required, recommended blockchain technology Number of meetings 19 matters for noting or approval by the Board: • Feedback from the legal advisor appointed to consolidate the findings of Membership at year end • Group annual financial statements, integrated report, subsidiary annual the private intelligence dossier commissioned by the former GCE Chair: Ms Fathima Gany 18/19 financial statements and related documents for the 2023 financial year, • Progress on Eskom’s security vetting programme Ms Ayanda Mafuleka 17/19 including the report of the Audit and Risk Committee, the external In addition, the committee provided oversight and considered reports on Mr Leslie Mkhabela 14/19 audit opinion, the going concern assessment, the status of reportable areas such as internal audit and combined assurance; Eskom’s fraud prevention irregularities and the management representation letter to the external plan and forensic investigations; the risk landscape and Priority 1 risks; Dr Busisiwe Vilakazi 19/19 auditors information technology governance and performance; PFMA compliance; as Dr Claudelle von Eck 19/19 • External auditor progress reports, key audit matters and the external audit well as litigation and other significant legal matters. Former members opinion, including the schedule of unadjusted audit differences and final Dr Rod Crompton1 16/19 audit fees, relating to the 2023 financial year During the year, ARC held several in-committee meetings to deliberate 1. Resigned as a director from 27 February 2024. • Feedback on addressing audit findings, including those related to non- on confidential and sensitive matters. These included matters relating to compliance with the PFMA; crime, fraud and corruption; as well as crime, fraud and corruption; the use of data analytics to identify suspicious Representation at year end outstanding reportable irregularities transactions that should be investigated; as well as executive vacancies and • Eskom’s King IV application register for the 2023 financial year suspensions. 1 • Group interim financial statements and interim performance commentary for the six months ended 30 September 2023, including feedback from the AFS Refer to the report of the Audit and Risk Committee in the annual financial external auditor’s review thereof statements for further information 2 • Statutory audit engagement letter for the 2024 financial year, as well as Age other audit-related services performed by the external auditors Demographics diversity • Audit oversight strategy of the Auditor-General of South Africa (AGSA) FUTURE FOCUS AREAS • Three-year rolling strategic internal audit plan, including the annual audit Focus areas for the coming year include: 3 • Appointing a member with expertise in digital transformation and insurance plan and combined assurance plan for the 2025 financial year, as well as Eskom’s audit recovery action plan • Considering liquidity risk, sustainability risk relating to financial reporting, 4 Eskom’s status as a going concern, as well as efforts to improve the income • Eskom’s fraud prevention plan for the 2025 financial year • Insurance plan and budget for the 2025 financial year statement and strengthen the balance sheet ACI female ACI male 40–49 50–59 • Reviewing the effectiveness of the finance function, PFMA Loss Control • The organisational structure, disciplines and reporting lines of the then Assurance and Forensics Department, to restructure the department into Department, risk and compliance management and the internal control separate internal audit and forensics functions, as well as enhancing the environment Committee’s focus Composition • Monitoring the organisation’s effectiveness in implementing capability of the forensics function to execute on findings recommendations from forensic findings and dealing with consequence Financial capital 5 members • Eskom’s financial plan and funding drawdown plan for the 2025 to management, to ensure that contraventions are appropriately addressed Human capital 100% independent non-executive directors 2029 financial years for inclusion in the Corporate Plan, as well as the • Assessing the capacity and capability of the organisation to combat crime, Intellectual capital GCE and GCFO attend by invitation as officials shareholder compact for the 2025 financial year fraud and corruption, including the consolidation of Eskom’s investigative • Quarterly shareholder reports covering the Eskom group’s performance functions into the Group Investigations and Security function, to investigate against the shareholder compact and other strategic matters for the PURPOSE these matters and implement recommendations from investigations shareholder’s attention, such as compliance with Government’s debt relief The committee’s roles and responsibilities include: • Monitoring progress on Eskom’s legal separation and compliance conditions, which were submitted to DPE and National Treasury • Performing the statutory functions of an audit committee set out in with Government’s debt relief conditions • Status updates on Generation’s initiatives to improve inventory • Overseeing implementation of Eskom’s fraud prevention plan and initiatives the Companies Act, 2008 and the PFMA, 1999, including oversight management and coal supply assurance projects in response to external of internal and external audit functions, financial reporting, internal to address matters identified through both internal and external processes, audit findings including non-technical energy losses arising from ghost vending control systems, as well as risk and compliance management • Progress on Eskom’s municipal debt management initiatives, including the • Overseeing risks and opportunities and the governance of information • Exercising ongoing oversight of information technology and operational municipal debt relief programme technology management, including cyber-security, and addressing findings technology, including cyber-security • Progress on the legal separation of Transmission, as well as the intercompany • Serving as the statutory audit committee for Eskom’s wholly owned related to the breakdown of critical controls in the online vending system loan, transactional documents and other matters relating to NTCSA • Monitoring of combined assurance, including overseeing the internal audit subsidiaries, with the exception of Escap SOC Ltd and Nqaba Finance • Solvency and liquidity test for Eskom and NTCSA following the NTCSA function and the external audit processes 1 (RF) Ltd, which have their own audit committees. Going forward, transaction • Overseeing the preparation of the annual financial statements of Eskom NTCSA established its own statutory audit committee in May 2024, • The section 45 resolution required in terms of the Companies Act, 2008 and its subsidiaries and the integrated report for the Eskom group following the appointment of independent non-executive directors to for granting of financial assistance among related or inter-related companies the NTCSA board from 1 February 2024 46 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Assurance and control environment ARC sets direction and provides oversight on assurance, forensics, risk Governance Internal controls IR A n investigation uncovered the bulk generation of illicit prepaid electricity management, controls, compliance and the governance of information Governance requires In general, the design of tokens which exposes Eskom to various risks. For further information, technology across the organisation in accordance with the related refer to “Our infrastructure – Ghost vending in perspective” on page 79 principles of King IV. improvement in respect of internal controls is adequate, compliance with applicable although application remains On an annual basis, ARC approves the charter of the Internal Audit laws and regulations. Board only partially effective and The system and process of risk management is adequate, although the Department, together with a risk-based audit plan and fraud prevention initiatives to enhance systems, requires improvement and effectiveness thereof needs to be improved. The compliance framework plan, to address the complexity of risks facing the organisation. The Internal controls, resources, policies and focused effort by management. requires continued focus in its application, especially in terms of PFMA Audit Department represented by the Chief Audit Executive reports procedures as well as reporting Control deficiencies were requirements and contract management. directly to ARC and maintains independence from executive management by structures are in progress. identified relating to determining the scope of internal audits and assurance projects, performing Enhancements are not yet compliance with operational ARC acknowledged management’s efforts to remedy identified weaknesses assurance work and communicating results free from interference. effective as there are areas that management processes, supply but is concerned that the internal control environment has not improved require significant improvement, chain management, contract significantly, with matters not addressed at the rate required to reduce The Internal Audit Department facilitates and coordinates the execution the risk exposure to the business. Consequence management needs to be such as compliance with the management, sustainability of combined assurance activities in Eskom. The combined assurance improved to address crime, fraud and corruption as well as non-compliance PFMA, 1999. The successful management, as well as legal, model covers supervision and oversight from line management; with well-documented processes, policies and procedures. Furthermore, implementation of the turnaround regulatory and compliance specialised risk, control and compliance functions; a combination of ARC noted the need for additional resources and skills in the finance, plan remains a leadership priority processes, among others internal and external assurance; and, ultimately, oversight by ARC and the internal audit and forensics functions. Specialist skills are required to Board. This approach seeks to enable an effective control environment, Risk management Financial controls enhance the value that these functions add to the group. to provide reasonable assurance and support the accuracy and integrity The design of the system of risk The system of internal financial of information used for decision-making and reporting to stakeholders. Despite these shortcomings, ARC concluded that the compensating management for identifying, controls is adequate and measures in place to combat any identified breakdown in the system of The audit plan for the 2025 financial year is focused on the following key managing and reporting on risk is provides a reasonable basis internal financial controls are adequate to provide a reasonable basis for themes: adequate, although the system of for the preparation of Eskom’s the preparation of Eskom’s financial statements. controls relating to compliance is financial statements Operational Financial only partially effective The committee also assessed the ability of the company and the group sustainability sustainability to continue to operate as a going concern in the foreseeable future, by Project Procurement and supply chain considering liquidity based on the latest cash flow forecasts and stress- management management EXTERNAL AUDIT OPINION tested scenarios for 12 months after signoff of the financial statements. Organisational Risk, governance The independent auditors, Deloitte & Touche, issued a qualified opinion restructuring and compliance relating to the quantification and disclosure of information required in ARC acknowledged that there are various dependencies and material Maintenance Information terms of the PFMA, 1999. Except for this qualification, Eskom’s financial uncertainties that may cast significant doubt on the going concern management management statements are considered to be fairly presented in terms of IFRS assessment, including whether the plans to address the risks to manage Contract Human resources Accounting Standards. Furthermore, the independent auditors have the going concern will materialise as anticipated. Although the liquidity management management emphasised a number of matters in their report, including a material position has improved due to Government’s debt relief, liquidity beyond uncertainty relating to Eskom’s ability to continue as a going concern. March 2026 remains at risk given the group’s financial and operational Quarterly evaluations are undertaken and amendments to the audit plan are However, these matters do not affect their opinion. challenges, including growth in overdue municipal and metro debt partly considered in response to changes in operations, risks, processes, systems due to poor compliance with the municipal debt relief programme, and controls to ensure that the audit plan remains adaptive and risk-based. and funding required for the Transmission Development Plan. It is also  efer to the independent auditor’s report in the annual financial AFS R statements for further information imperative that the improved generation plant performance is sustained. IR Refer to “Promoting an ethical culture” from page 54 for further ARC concluded that there is a reasonable expectation that the material information on the fraud prevention plan uncertainties affecting Eskom’s going concern will be satisfactorily addressed ARC CONCLUSION Based on feedback on the results of the combined assurance activities, ARC by the mitigation strategies in place, particularly due to the continued financial noted that the internal control environment requires significant improvement support from Government. Consequently, ARC recommended to the Board INTERNAL AUDIT ASSESSMENT and therefore, ARC had to place higher reliance on the work of external that the adoption of the going concern basis of accounting is appropriate. On a quarterly basis, the Internal Audit Department reports to ARC on the status of governance, risk management, compliance and the adequacy assurance providers. The committee noted the continuing breakdown in and effectiveness of preventative and corrective controls. Based on the internal controls over financial reporting, as well as inadequacies in general AFS Refer to the report of the Audit and Risk Committee and note 3.2 in findings from the audits planned and completed during the 2024 financial controls over information and operational technology, and emphasised the the annual financial statements for further information year, Eskom’s Internal Audit Department has concluded the following: need for remedial action and improvement. 47 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Business Operations Performance Committee (BOPC) for the year ended 31 March 2024 MEMBERSHIP AND ATTENDANCE PURPOSE • The status of major projects, including operational technology and The committee’s responsibilities include: information technology projects Number of meetings 10 • Review of technical aspects included in the internal audit catalyst and • Overseeing Eskom’s technical performance and operational issues, as Membership at year end well as safety, security, health, environmental and insurance matters forensic catalyst reports which are not dealt with by the Social, Ethics and Sustainability • Update on the legal separation progress Chair: Mr Clive le Roux1 8/10 Committee • Technical aspects and assumptions included in the Corporate Plan for Mr Lwazi Goqwana 9/10 • Monitoring the adequacy of electricity supply, as well as progress the 2025 to 2029 financial years and the shareholder compact for the Ms Ayanda Mafuleka 6/10 against targets relating to the production and supply of electricity set 2025 financial year out in the shareholder compact and Corporate Plan Dr Tsakani Mthombeni 10/10 FUTURE FOCUS AREAS • Overseeing coal, nuclear and renewable primary energy Ms Tryphosa Ramano 7/10 • Reviewing progress achieved through production and operational Focus areas for the coming year include: Dr Busisiwe Vilakazi 9/10 strategic initiatives, proposed changes to measures reported in the • Overseeing the Generation Recovery Plan and outage management Operational Health Dashboard and other operational reports, as well programme for the short, medium and long term Former members as outcomes from major technical investigations and technical audits • Reviewing the adequacy of the power system for the upcoming winter Dr Mteto Nyati1 6/7 • Providing guidance on production and operational risks, as well as the and summer periods Dr Rod Crompton2 7/10 appropriateness of mitigation plans, stakeholder feedback and public • Shifting the Generation Recovery Plan from capacity monitoring to communication plans reliability monitoring 1. Dr Mteto Nyati stepped down as chair of BOPC following his appointment as • Establishing leading indicators for Generation performance reporting Chairman of the Board from 31 October 2023. Thereafter, Mr Clive le Roux took KEY ACTIVITIES DURING THE YEAR over as chair of BOPC. • Reviewing technical performance and operational issues, including The committee considered the following and, where required, production issues, customer service issues, related corporate 2. Resigned as a director from 27 February 2024. recommended matters for noting or approval by the Board: procedures, as well as safety, security, health, environmental and Representation at year end • Generation’s operational performance, including the system outlook insurance matters for the winter and summer periods • Monitoring progress against shareholder compact and Corporate Plan 1 1 • Independent review of Generation’s recovery plan, together with targets relating to the production and supply of electricity progress updates on the plan to address Generation’s turnaround • Overseeing coal, nuclear and renewable primary energy supplies • Feedback from an external engineering consultant on the state of the • Considering Generation’s involvement in new clean energy production generation plant • Monitoring the implementation of the TDP by NTCSA 1 Age • Strategic review of the continued operation of coal-fired power • Overseeing Distribution’s operational performance, including the use Demographics 3 diversity stations of technology to address energy losses 4 • Briefing on the Koeberg long-term operation (LTO) project, which will • Providing guidance and assurance on production and operational risks 2 enable the power station to operate safely for another 20 years identified and determining whether appropriate mitigation measures • Eskom’s coal supply plan are in place • Feedback on major power station unit incidents • Regularly considering proposed changes to measures reported in the ACI female ACI male 40–49 50–59 60+ • Acceleration of the Komati Power Station repowering and repurposing Operational Health Dashboard, other operational reports and any White male project other operational indices • Delivery against Eskom’s mandate of preventing a national blackout, as • Reviewing findings and the implementation of recommendations from well as readiness to respond and restore the national power system major technical investigations and technical audits on a regular basis Committee’s focus Composition from a national blackout Manufactured capital 6 members • Transmission’s operational performance, the Transmission Natural capital 100% independent non-executive directors Development Plan (TDP) and related progress Human capital GCE attends by invitation as an official • Distribution’s operational performance and grid access initiatives • Technical review of the funding of the battery energy storage system Intellectual capital (BESS) project Social and relationship capital 48 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Governance and Strategy Committee (GSC) for the year ended 31 March 2024 MEMBERSHIP AND ATTENDANCE PURPOSE • Progress on the establishment of the Distribution System Operator The committee’s responsibilities include: • Recommended candidates to the Board for the appointment of Number of meetings 14 the Eskom GCE as well as NTCSA board members, for eventual • Overseeing implementation of Government directives, roadmaps Membership at year end and policy documents relating to the restructuring of Eskom and the recommendation to the shareholder Chair: Dr Mteto Nyati1 13/14 electricity supply industry • Appointment of Ms Priscillah Mabelane as chairperson and Dr Brian • Making recommendations to the Board on Eskom’s long-term strategy Armstrong as lead independent director of the board of NTCSA Ms Fathima Gany 13/14 and restructuring • Appointment of the acting CEO of Escap SOC Ltd while awaiting Mr Clive le Roux 2 3/4 • Overseeing implementation of Eskom’s strategy and turnaround plan finalisation of the recruitment process for a permanent CEO Mr Bheki Ntshalintshali 13/14 • Ensuring the alignment of strategies and plans between Eskom and its • Status update on supplier litigation and legal cases impacting Eskom subsidiaries, including the future roles of the Generation, Transmission • Appeals and associated legal liabilities related to the Minimum Ms Tryphosa Ramano 8/14 Emissions Standards (MES) and Distribution businesses Dr Claudelle von Eck 13/14 • Making recommendations and driving key actions with various • Feedback on protection against data leakage Former members stakeholders to ensure the financial sustainability of Eskom, including strengthening of the balance sheet FUTURE FOCUS AREAS Mr Mpho Makwana1 10/10 • Reviewing the Board’s size, composition, qualifications, skills, Focus areas for the coming year include: 1. Mr Mpho Makwana, former chair of GSC, resigned as a director from experience and diversity and making recommendations to the Board • Overseeing the implementation of Eskom’s turnaround plan, with a 30 October 2023. Thereafter, Dr Mteto Nyati took over as chair of GSC. and nominating directors to the shareholder focus on addressing the national energy crisis 2. Appointed as a member from 31 October 2023. • Overseeing the annual evaluation of the Board, its committees and • Supporting the implementation of the President’s Energy Action subsidiary boards and making recommendations to the Board on Plan and collaborating with the Minister of Electricity and Energy, Representation at year end NECOM and the National Joint Operational and Intelligence Structure the structure of its committees and the appointment of directors to subsidiary boards (NATJOINTS) 1 1 • Monitoring progress against key milestones of Eskom’s legal separation, KEY ACTIVITIES DURING THE YEAR with a focus on the commencement of trade of NTCSA and the 2 The committee considered the following and, where required, corporatisation of NEDCSA recommended matters for noting or approval by the Board: • Reviewing Eskom’s strategy to respond to developments in the Demographics 3 Age • Eskom’s strategic planning assumptions and implications operating environment and Government’s revised Strategic Intent diversity • Progress against Eskom’s strategic objectives, the change management Statement for Eskom plan for Eskom’s 2035 strategy, as well as the JET strategy • Recommending the shareholder compact, Corporate Plan, budgets 2 • The Corporate Plan for the 2025 to 2029 financial years and the and financial plans to the Board for approval shareholder compact for the 2025 financial year 3 • Lessons learnt from the shutdown of Komati Power Station ACI female ACI male 40–49 50–59 60+ • Quarterly performance discussion on Exco’s compacting process White male • Adoption of a balanced scorecard approach for the performance compacting cycle for all direct reports of the GCE for the 2025 financial year Committee’s focus Composition • Progress update on legal separation, alignment on timelines as well as Financial capital 6 members key resolutions to support the legal separation of Transmission Manufactured capital 100% independent non-executive directors • Recommendations on the implementation of the merger agreement Natural capital GCE and GCFO attend by invitation between Eskom and NTCSA, the amendment of the Government Human capital as officials Support Framework Agreement for IPP contracts transferred to NTCSA, as well as the implementation plan and timelines for the legal Social and relationship capital separation of Transmission and commencement of trade of NTCSA 49 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Human Capital and Remuneration Committee (HCRC) for the year ended 31 March 2024 MEMBERSHIP AND ATTENDANCE PURPOSE • Feedback on initiatives to provide psychosocial support to employees The committee’s responsibilities include: in dealing with stresses related to the electricity crisis and in Number of meetings 8 • Overseeing human capital strategies, policies and performance, preparation for the constrained winter period Membership at year end including relationships with organised labour and employees, • People-related matters covered in quarterly forensic catalyst reports, employment equity as well as Eskom’s ethical culture the three-year rolling strategic internal audit plan, as well as the annual Chair: Dr Claudelle von Eck 8/8 • Reviewing reports relating to the adequacy and effectiveness of skills audit plan and the combined assurance annual plan for the 2025 Ms Fathima Gany 8/8 and people management processes in Eskom financial year • Ensuring that appropriate leadership continuity plans are in place for • Remuneration of directors and executives, including related Ms Ayanda Mafuleka 1 2/4 executive directors, senior executives and prescribed officers, and benchmarks Mr Leslie Mkhabela 6/8 annually reviewing these plans • People-related aspects included in the Corporate Plan for the 2025 to Mr Bheki Ntshalintshali 8/8 • Reviewing and making recommendations to the Board on Eskom’s 2029 financial years and shareholder compact for the 2025 financial year organisational structure Mr Lwazi Goqwana 2 – • Overseeing the development, review and implementation of a FUTURE FOCUS AREAS Former members remuneration policy that aligns to King IV and the Board’s direction on Focus areas for the coming year include: fair, responsible and transparent remuneration practices Mr Clive le Roux 3 4/4 • Overseeing the implementation of the committee’s four focus areas • Reviewing the nature and adequacy of the performance measurement for human capital, which include: fostering a high-performance ethical Dr Mteto Nyati4 3/4 methodology applied throughout Eskom, as well as the appropriateness of culture; being an employer of choice; developing a future-fit and Eskom’s short-term and long-term incentive schemes 1. Appointed as a member from 31 October 2023. productive organisation; and building skills and capabilities • Making recommendations to the Board on matters pertaining to the 2. Appointed as a member from 25 March 2024. No meetings were held after this date. • Monitoring human capital performance and people-related risks appointment, removal and resignation of prescribed officers and senior 3. Stepped down as a member following appointment as chair of BOPC and member of executives and ensuring that these processes are credible and transparent quarterly, together with reporting on the ethical implications of GSC from 31 October 2023. matters considered by the committee 4. Stepped down as a member following appointment as Chairman of the Board from KEY ACTIVITIES DURING THE YEAR • Providing input on people-related matters into Eskom’s integrated 31 October 2023. The committee considered the following and, where required, report, corporate strategy, internal audit and forensic reports recommended matters for noting or approval by the Board: • Supporting interventions to improve employee morale, together with Representation at year end • Eskom’s interim executive structure for most of the year under the monitoring progress on culture initiatives at executive management level acting GCE • Promoting a speak-up culture through whistle-blower awareness, 1 • Analysis of the capability and continuity of Eskom’s human resources protection and support function • Monitoring progress on divisional and functional leadership • Feedback on succession planning, talent management and recruitment responsibilities related to people matters, as well as technological processes for vacant executive positions changes impacting human capital 3 3 Age 3 • Progress on key matters identified during the committee’s workshop Demographics held in January 2023, to review the effectiveness of Eskom’s human • Considering the appropriateness of the hybrid work model as it relates diversity to the achievement of Eskom’s strategic objectives capital strategies and processes 2 • Feedback on the negotiations with organised labour at the 2023 • Overseeing the turnaround, capacity and capability of the EAL Collective Bargaining Forum • Finalising the remuneration strategy for employees at senior • Quarterly human capital performance reports, focusing on workforce management and middle management/professionally qualified levels analytics, people relations, health and wellness, employee benefit • Monitoring leadership continuity, succession planning and talent ACI female ACI male 40–49 50–59 60+ costs and organisational effectiveness, including recommendations for management strategies, to improve leadership quality and stability consideration by management on grievances and long outstanding • Determining criteria to measure and monitor the performance disciplinary matters of executive management for the 2025 financial year based on a Committee’s focus Composition • Key resolutions related to human capital for the legal separation of balanced scorecard, including finalising performance compacts for the Human capital 6 members Transmission GCE and GCFO • People-related priority 1 risks • Determining criteria to measure the performance of non-executive Intellectual capital 100% independent non-executive directors • Progress on Eskom’s 1:1:6:10 culture transformation programme directors Social and relationship capital GCE and GCFO attend by invitation as • The turnaround of the Eskom Academy of Learning (EAL) officials • Considering the reimplementation of short- and long-term incentive • Progress on addressing gaps identified from the skills audit concluded schemes for employees in the prior year • Reviewing key human capital policies, including the security protection • Business learning outcomes from the top talent programme for general and executive management policy for top leadership and the organisation’s remuneration policy 50 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Remuneration of directors and executives OUR APPROACH TO REMUNERATION REMUNERATION PRACTICES FOR DIRECTORS AND In December 2023, the shareholder approved a cost-of-living adjustment HCRC is mandated by the Board to oversee key human capital policies, EXECUTIVES of 5.5% for executives, backdated to 1 April 2023. The shareholder including those relating to remuneration. HCRC strives to ensure that NON-EXECUTIVE DIRECTORS acknowledged that there have been no increases for executives for remuneration practices encourage value creation, support achievement several years, together with the critical need to ensure the retention of HCRC makes recommendations on non-executive remuneration to the of our strategic objectives and advance long-term sustainability by: leadership to stabilise the organisation. Board, for consideration and approval by the shareholder. Non-executive • Adhering to principle 14 of King IV, which requires that remuneration remuneration was structured to comprise the following during the 2024 VARIABLE REMUNERATION practices are fair, responsible, transparent and promote the financial year: Variable remuneration is linked to the achievement of individual and achievement of strategic objectives in the short, medium and long term organisational performance objectives, subject to defined gatekeepers. • Implementing DPE’s guidelines for the remuneration and incentives of Fixed monthly fee Incidental expenses Short-term incentives relate to a single financial year, whereas long-term executives, prescribed officers and non-executive directors of SOCs Determined in line with DPE’s Reimbursement of expenses incentives cover a three-year period. • Ensuring alignment of individual performance to organisational targets guidelines, and based on directors’ incurred by directors in fulfilling Short-term incentives set in the shareholder compact membership and/or chairmanship their duties towards Eskom Given Eskom’s financial constraints, no short-term incentives have been of Board committees paid to executives since the 2018 financial year. Subsequent to year end, • Complying with the remuneration-related condition of the Eskom Debt Relief Act, 2023 as amended, which requires that remuneration the Board reinstated the short-term incentive scheme for implementation adjustments do not negatively affect Eskom’s overall financial position In February 2024, the then Minister of Public Enterprises approved in the 2025 financial year, subject to the achievement of set targets, to and sustainability changes to the remuneration structure for non-executive directors with encourage a high-performance culture. effect from 1 April 2024. Going forward, non-executive remuneration will Long-term incentives There are separate remuneration policies in place due to different be structured to comprise a fixed monthly retainer fee, reimbursement No long-term incentives have been paid to executives since the 2018 remuneration practices for directors, executives, managerial employees of incidental expenses as well as a quarterly fee for Board and Board financial year as the scheme was suspended. However, the Board has and bargaining unit employees. committee meetings attended. reinstated the long-term incentive scheme and approved performance conditions for the period 1 April 2023 to 31 March 2026, which are EXECUTIVES aligned to the Corporate Plan and the shareholder compact. IR Remuneration of managerial and bargaining unit employees is discussed HCRC is responsible for determining executive remuneration in line with under “Our people – Remuneration and benefits” from page 97 Performance conditions include financial and non-financial targets in DPE’s guidelines. Executives are not involved in the approval process, and HCRC maintains the right to adjust, withhold or veto any remuneration areas such as ensuring business sustainability and reliability of electricity adjustments. supply, providing for future power needs as well as supporting South TOTAL REMUNERATION FOR DIRECTORS AND Africa’s developmental objectives. The performance conditions are EXECUTIVES Executive remuneration comprises both a guaranteed and variable complemented by a set of gatekeeper conditions, each carrying a weight Category, R000 2024 2023 component which is designed to demonstrate a clear relationship between of 25%, which include: performance and remuneration, based on the following principles: • Average unplanned generation plant unavailability below 14 000MW Non-executive directors1 12 185 7 917 • Cash from operations of at least R55.7 billion Executive directors2 9 176 12 587 Guaranteed • Lost-time injury rate below 0.30 Variable component Other group executives 27 911 24 768 component • An unqualified audit opinion in terms of IFRS Accounting Standards Short-term Long-term (excluding information disclosed in terms of the PFMA, 1999) Total remuneration 49 272 45 272 Remuneration and incentives incentives benefits Performance awards were granted to eligible executives on 1 April 2023 1. The number of non-executive directors increased from six at 1 April 2022 (covering Ensures that talented Manages and Ensures the and have a three-year vesting period. The value of the performance a large part of the 2023 financial year) to 13 at 1 April 2023 (covering the 2024 individuals are facilitates long-term awards is deemed to be R1 at grant date, and is escalated at a money financial year), following the appointment of the current Board on 1 October 2022. Non-executive director remuneration has increased accordingly. attracted, retained performance through sustainability of the market rate to determine the value at reporting date. and receive support a results-driven organisation through 2. The decline in executive director remuneration is a result of acting appointments for to perform their roles approach that is retention and Performance awards only vest if, and to the extent that, targets are met. both the GCE and GCFO positions, following the departure of Mr André de Ruyter The Board retains full discretion on the amounts to be paid at the end of in February 2023. efficiently collaborative, long-term transparent and fair performance the three-year vesting period, in line with: conditions and • The percentage of performance awards that vest, based on the  efer to note 49 in the annual financial statements for detailed AFS R targets performance conditions and gatekeepers achieved remuneration information as required by King IV • The value of the performance awards that vest, based on the grant value escalated at the money market rate GUARANTEED REMUNERATION Housing loans to executive directors and other group executives are Guaranteed remuneration is fixed and includes compulsory benefits The vesting of the performance awards is dependent on the executive disclosed in the annual financial statements. No loans have been made to such as medical aid, pension, group life and death benefits, as well as remaining in Eskom’s employment throughout the vesting period. The non-executive directors. allowances for motor vehicle expenses and personal security. performance awards lapse if employment ceases during the vesting period, other than for reasons such as retirement or death. 51 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Investment and Finance Committee (IFC) for the year ended 31 March 2024 MEMBERSHIP AND ATTENDANCE KEY ACTIVITIES DURING THE YEAR In addition, the committee considered and approved matters within The committee considered the following and, where required, its approval mandate, and considered and recommended those above Number of meetings 15 recommended matters for noting or approval by the Board: its approval limits to the Board. These matters included various Membership at year end • Submission of Eskom’s regulatory clearing account (RCA) applications procurement strategies, capital investment approvals or revisions, as well for the 2022 and 2023 financial years to NERSA as other commercial decisions. Chair: Ms Tryphosa Ramano 13/15 • Review of the draft MYPD 6 revenue application for consultation in The committee recommended that the disposal of EFC not be approved Mr Lwazi Goqwana 15/15 terms of the Municipal Finance Management Act, 2003 by the Board due to the unfavourable terms offered by the preferred Mr Clive le Roux 14/15 • The offer received for the disposal of Eskom Finance Company SOC bidder in the most recent disposal process conducted during the year. Dr Tsakani Mthombeni 13/15 Ltd (EFC). Refer below for further information The disposal of EFC remains a priority and is being pursued through an • Generation’s strategic review for the continued operation of power updated disposal strategy, approved by the committee in April 2024. Former members stations A request for proposal was issued in May 2024 and submissions were Dr Mteto Nyati4 5/8 • Procurement strategy for the supply and delivery of both high-quality received from four bidders, with the committee supporting the selection and coarse coal to Eskom’s coal-fired power stations through a panel of a preferred bidder in June 2024. The Board accepted an offer from 1. Stepped down as a member following appointment as Chairman of the Board from African Bank, the preferred bidder, in October 2024 and provided a 31 October 2023. of suppliers • Procurement strategy and mandate to negotiate and conclude a new rail mandate to negotiate the final agreement, subject to PFMA approval. Representation at year end contract with Transnet Freight Rail (TFR) for the transportation of coal Eskom is targeting to conclude the transaction during the 2025 calendar by rail, as well as progress updates on the TFR coal line upgrade project year, subject to the required regulatory approvals from the Competition 1 1 1 • Possible disposal strategy for the excess coal stockpile at Medupi Commission, the Prudential Authority and the South African Reserve Power Station Bank. The transaction does not meet the criteria to be recognised as held • Procurement strategy for petrol and diesel for sale at year end in terms of IFRS Accounting Standards. Age • Commercial strategies for various Transmission infrastructure projects Demographics 2 • Progress on the TDP, including funding plans and progress, spend to FUTURE FOCUS AREAS diversity Focus areas for the coming year include: date and related action plans • Feedback on a potential industrial plan for Eskom • Appointing an additional member with expertise in corporate finance • Progress updates on the legal separation of Transmission and • Reviewing Eskom’s capital allocation framework 1 • Monitoring the execution of approved capital projects 2 Distribution, as well as key resolutions required for Transmission’s legal separation, including lender consent, steps after lender consent and • Overseeing procurement strategies relating to capital projects ACI female ACI male 40–49 50–59 60+ information technology readiness • Evaluating and monitoring the liquidity and balance sheet of the Eskom White male • Regular updates on Eskom’s liquidity position and debt maturity profile group, including the impact of Government’s debt relief support • Eskom’s capital allocation framework and five-year capital investment Committee’s focus Composition plan for the 2024 to 2028 financial years • Eskom’s financial plan for the 2025 to 2029 financial years for inclusion Financial capital 4 members in the Corporate Plan, as well as the shareholder compact for the 2025 Manufactured capital 100% independent non-executive directors financial year GCE and GCFO attend by invitation as • Agreements for Eskom to act as buyer under bid window 7 of the officials Renewable Energy Independent Power Producer (RE-IPP) Programme, the Gas Independent Power Producer Programme (GASIPPP) as well PURPOSE as bid window 2 of the Battery Energy Storage Capacity Independent The committee’s responsibilities include: Power Producer Procurement Programme (BESIPPPP) • Overseeing financial budgets, capital and borrowing programmes, and • Power purchase agreements and proposals under the Risk Mitigation procurement strategies Independent Power Producer Procurement Programme (RMIPPPP) • Approving business cases for new ventures, capital investments, • Eskom’s loadshedding reduction programme, procurement of projects, disposals and other commercial matters ancillary services on a standard offer basis, as well as increased budget • Monitoring the concept, design, execution and finalisation phases of requirements for short-term IPP programmes major capital projects • Overseeing Eskom’s treasury function 52 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Report by the Social, Ethics and Sustainability Committee (SES) for the year ended 31 March 2024 MEMBERSHIP AND ATTENDANCE PURPOSE FUTURE FOCUS AREAS The committee’s responsibilities include: Focus areas for the coming year include: Number of meetings 6 • Performing the statutory functions of a social and ethics committee set • Ensuring that all requirements of the Companies Act, 2008 and nuclear Membership at year end out in the Companies Act, 2008 safety regulations are adhered to on an ongoing basis Chair: Mr Bheki Ntshalintshali 6/6 • Overseeing socio-economic development; good corporate citizenship; • Overseeing Eskom’s ethics review to improve the ethics management environmental, climate change, health and safety programmes; and the strategy and related policies and procedures Ms Fathima Gany 6/6 reasonable assurance of selected KPIs through the sustainability audit • Considering rehabilitation and restorative justice practices with respect Mr Clive le Roux 5/6 • Supervising nuclear strategies and policies, as well as nuclear safety in to suppliers Mr Leslie Mkhabela 5/6 terms of regulatory requirements and international best practice • Ensuring that Eskom remains a socially committed and responsible • Serving as the statutory social and ethics committee for Eskom’s wholly corporate citizen in line with its developmental mandate, including Dr Tsakani Mthombeni 5/6 the improvement of corporate social responsibility initiatives and owned subsidiaries, except for NTCSA, which has established its own Dr Busisiwe Vilakazi 6/6 committee following the appointment of independent non-executive sustainable development practices directors to the NTCSA board from 1 February 2024 • Monitoring compliance with environmental laws and remediation plans Dr Claudelle von Eck 6/6 for areas of non-compliance, as well as Eskom’s response to climate Former members KEY ACTIVITIES DURING THE YEAR change and the Just Energy Transition The committee considered the following and, where required, • Exercising ongoing oversight of Eskom’s stakeholder engagement plans Dr Rod Crompton1 5/6 recommended matters for noting or approval by the Board: and stakeholder management performance 1. Resigned as a director from 27 February 2024. • Action plans to ensure compliance with national environmental • Overseeing Eskom’s environmental, social and governance (ESG) management legislation, as well as feedback on Generation’s framework Representation at year end environmental contraventions and related reportable irregularities • Implementing the changes set out in the Companies Amendment Bill, 1 • Processes supporting the legal separation of Transmission, including the 2023 relating to social and ethics committees corporate identity of NTCSA 2 • Eskom’s integrated report and sustainability report for the year ended  efer to the 2024 sustainability report for more information relating to SR R 31 March 2023, as well as feedback from the external auditors on the 3 Eskom’s sustainability practices 3 Age reasonable assurance of selected sustainability KPIs Demographics diversity • Subsidiaries’ quarterly sustainability reports, encompassing subsidiary performance, the promotion of human rights and fair labour practices, environmental and good corporate citizenship indicators and the implementation of anti-corruption measures 3 • Results of the ethics risk assessment conducted by the Ethics Institute, 2 ethics monitoring reports and Eskom’s ethics strategy ACI female ACI male 40–49 50–59 60+ • Progress on compliance with recommendations by the Organisation White male for Economic Cooperation and Development (OECD) on anti- corruption Committee’s focus Composition In addition, the committee provided oversight and considered reports on the following areas: Financial capital 7 members • Nuclear oversight reports, covering nuclear safety and nuclear plant Manufactured capital 100% independent non-executive directors performance; safety, health, environment and quality performance; Natural capital GCE and GCFO attend by invitation as ethics and King IV compliance; and transformation Human capital officials • Progress on Eskom’s capacity expansion programme from a safety, Intellectual capital environmental, financial, operational (project execution), governance Social and relationship capital (ethics, audit findings, anti-corruption and forensics) and socio- economic perspective 53 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Promoting an ethical culture ETHICS IN ESKOM The Ethics Institute conducted an independent ethics risk assessment to determine potential ethics improvement opportunities, as well as Did you know? The Board, through SES, is responsible for the governance of ethics in No Eskom employee, nor related parties of employees, are allowed to Eskom, by establishing an ethical culture and providing oversight of ethics unethical behaviour and practices that place Eskom at risk. As indicated do business with Eskom or its subsidiaries. Non-executive directors strategies and policies in accordance with principles 1 and 2 of King IV. in last year’s integrated report, the results of the assessment highlighted must declare all possible conflicts of interest, including those with The Board continues to affirm its zero-tolerance approach towards the maturity of ethics awareness in the organisation, but noted that related parties. unethical behaviour and is committed to establishing a high-performance improvement is required in terms of accountability, transparency and ethical culture throughout the organisation. addressing the lack of trust. All Board members and Exco members have completed their annual declarations of interest. The declarations made by Board Our Code of Ethics, known as the “The Way”, gives effect to a culture Our Ethics Office has developed a revised ethics strategy to address the members and Exco members are verified on an annual basis and no that supports ethical behaviour and a strong commitment to our values. recommendations arising from this assessment, which was considered deviations have been identified. Any declared interests are managed Adherence to “The Way” is not optional; it is the way we do business in by SES and approved by the Board in August 2024. The revised ethics appropriately in accordance with our conflict of interest policy. Eskom, guiding the way in which the Board and employees interact with strategy reflects Eskom’s commitment to fostering a high-performance one another as well as with our shareholder, customers, suppliers, the culture that promotes ethical leadership and embeds ethical practices All individuals acting on behalf of Eskom, including suppliers, are expected public, other stakeholders and the environment. in all business processes. The results of the assessment were also used to adhere to Eskom’s standards of ethical conduct. Suppliers found to be to determine the scope of ethics management interventions for the engaging in unethical practices and in contravention of our Code of Ethics “The Way” is defined by six core values, referred to as ZIISCE, which organisation; high-risk areas identified by the assessment will be subject are subject to a supplier disciplinary process. form the foundation of our values-driven organisation and reflect our to greater focus for ethics training and monitoring. commitment to the highest standards of governance and ethics. We encourage all stakeholders to report suspected incidents of MANAGING CONFLICTS OF INTEREST unlawful or irregular conduct involving Eskom’s directors, employees Zero Harm Integrity Our Code of Ethics is complemented by a conflict of interest policy or suppliers. Incidents may be reported through our whistle-blowing protecting the Eskom way acting the Eskom way and declaration of interest procedure which set out the obligations of hotline or, alternately, through Government’s anti-corruption hotlines. directors and employees in dealing with ethical issues, such as actual, These reporting channels are independent to ensure the integrity and Innovation Sinobuntu perceived and/or potential conflicts of interest, performing private work, thinking the Eskom way caring the Eskom way confidentiality of the process. managing relationships with suppliers as well as receiving or offering Customer satisfaction Excellence business courtesies. Government anti-corruption serving the Eskom way working the Eskom way Eskom whistle-blowing hotline hotlines All employees and directors are required to complete an annual declaration of interest by 30 June of every year, irrespective of whether A values-driven culture is one of the cornerstones of achieving a high- Phone: 0800 11 27 22 Phone: 0800 701 701 a conflict exists, or as soon as circumstances that may affect their performance ethical culture through our 1:1:6:10 culture transformation declaration change. Where a conflict exists, it must be declared and Email: eskom@whistleblowing.co.za Web: https://www.gov.za/ programme. managed. anti-corruption/hotlines IR For further information on the 1:1:6:10 culture transformation programme, Completion rate of annual declarations We believe that employees are often the first line of defence against refer to “Our people – Organisational effectiveness” on page 97 crime, fraud and corruption. Our whistle-blowing policy provides for the Employees at all levels 99.6% (2023: 99%) protection and support of whistle-blowers in line with the Protected We have a dedicated Ethics Office which provides guidance on ethical Executive management 100% (2023: 100%) Disclosures Act, 2000. However, the process of fostering a culture where issues in the workplace, develops ethics policies and procedures and speaking up is encouraged is ongoing. Board of Directors 100% (2023: 100%) monitors the effectiveness of their implementation. The Ethics Office DEALING WITH CRIME, FRAUD AND CORRUPTION also facilitates ethics training, which is mandatory for all employees on Our declaration of interest system sources information directly from The Board remains committed to enhancing systems, controls, policies, an annual basis. Where any unethical behaviour involving crime, fraud the Companies and Intellectual Property Commission (CIPC) database processes and reporting structures to address governance and and corruption are identified by the Ethics Office, these are referred to to ensure that any active directorships are appropriately disclosed. compliance challenges and support the fight against crime, fraud and Eskom’s forensic function for further investigation. Employees who have performed private work without prior approval or corruption. Over time, these challenges have eroded our reputation and have not declared a conflict of interest where one exists are subject to relationship with key stakeholders as well as our operational and financial investigation and disciplinary processes. Furthermore, employees who sustainability. The Board acknowledges that addressing these matters will contravene our conflict of interest policy by failing to submit a declaration be a lengthy process, but that it is necessary for the success of Eskom’s when required are subject to disciplinary action. turnaround. 54 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Promoting an ethical culture continued Upholding strong corporate governance practices and ensuring ARC is focused on improving the capacity and capability of the compliance with relevant laws, regulations and standards to promote organisation to combat crime, fraud and corruption. We have transparency, accountability and ethical conduct throughout the therefore embarked on a programme to consolidate our forensics, organisation are key focus areas. Regrettably, compliance with the PFMA, security and investigative functions into a single investigative unit, 1999 continues to remain a challenge; we are monitoring areas where known as the Group Investigations and Security (GIS) Depar tment. there is non-compliance and will continue to analyse the root causes to The mandate for GIS empowers the function to implement address these effectively. recommendations arising from forensic investigations to ensure consequence management is addressed timeously. Establishment of With the assistance of an independent service provider, we concluded an GIS commenced during the 2025 financial year, with Ms Tembela assessment of our crime risk management landscape during the year. The Kulu appointed as General Manager: Investigations and Security assessment focused on identifying risks related to bribery and corruption, from 1 October 2024. Ms Kulu repor ts directly to the GCE and financial crime, physical asset crime, cyber-crime and money laundering. is a permanent invitee to Exco. The final integration activities for Eskom is in the process of addressing the findings and recommendations. establishment of GIS are underway. A dedicated project management The Office of the GCFO is overseeing the consolidation and coordination office has been established to address findings from internal and of these initiatives to avoid duplication of efforts and promote more external investigations as well as data analytics more timeously. effective implementation. The second phase will focus on the design, improvement and implementation of appropriate and sustainable control frameworks to prevent and detect crime risks. An independent legal firm was appointed to obtain the private ESKOM’S FRAUD PREVENTION PLAN intelligence dossiers resulting from the investigation commissioned by Our fraud prevention plan is reviewed and updated annually. The the former GCE (which Eskom did not have direct access to) and assist key objectives of the plan include: the Board in addressing matters arising from allegations made in the • Improving Eskom’s ethical culture and legislative compliance dossiers as well as the former GCE’s book. Despite the lack of evidence • Adopting and embedding a zero-tolerance approach to crime, presented in the dossiers, the legal firm is consolidating the findings to fraud and corruption in our business operations aid in identifying matters for further investigation, and comparing them to • Raising awareness of fraud through various fraud prevention those matters that were already subject to active investigations, in order campaigns and training interventions, aimed at both employees to optimise remediation efforts. We are cooperating with all external and suppliers investigations and inquiries related to these matters. • Improving the transparency and credibility of the procurement During the year, ARC approved the restructuring of the Assurance and process Forensics Department from a single department into a separate internal • Encouraging stakeholders to blow the whistle on fraud, audit function, reporting to ARC, and a separate forensics function. corruption and financial misconduct through Eskom’s whistle- blowing channels, as well as providing protection and support IR Refer to “Assurance and control environment” from page 47 for further to whistle-blowers information on the Internal Audit Department • Enhancing fraud deep dives and fraud risk assessments • Establishing an intelligence-driven forensic investigation capacity and addressing the backlog of forensic cases Eskom’s forensics function is mandated to perform independent forensic investigations into cases of crime, fraud and corruption as well • Supporting management in the implementation of as other irregularities. The forensics function is suppor ted by a panel consequence management, and improving oversight and of external investigators and collaborates with many other specialised management accountability investigative functions throughout the organisation, together with law • Enhancing external partnerships to leverage impactful enforcement agencies. investigative outcomes, particularly with law enforcement agencies such as the Special Investigating Unit (SIU), the Directorate for Priority Crime Investigation (the Hawks) and the South African Police Service (SAPS) 55 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Promoting an ethical culture continued Management’s Anti-Fraud and Corruption Integration Committee recurrence, although a stronger focus is required to prevent repeat (AFCIC) has been expanded to include representation from Generation, incidents. ARC has emphasised the need for management to enhance the CIVIL RECOVERY Transmission and Distribution, as the majority of preventative controls control environment to be focused on prevention rather than detection. Several civil recovery proceedings have been launched by the SIU are managed within these business areas. AFCIC ensures integration During a forensic investigation, an assessment is conducted to determine and Eskom in response to findings from the Zondo Commission. between our forensic, legal, ethics, security, industrial relations and supplier review functions to prevent, detect and respond to incidents whether the case meets the requirements for reporting to law A settlement agreement was reached between SAP, the SIU and of crime, fraud and corruption. AFCIC has developed an organisation- enforcement agencies in terms of the Prevention and Combatting of Eskom relating to unlawful and invalid contracts from 2016. This is a wide fraud and anti-corruption risk register, to identify relevant risks and Corrupt Activities Act, 2004 (PRECCA). During the year, 139 matters notable recovery in the fight against crime, fraud and corruption. In controls for enhanced monitoring and to inform the focus areas of the were reported to the Hawks in terms PRECCA. Of the 330 cases April 2024, R570 million (including VAT) was recovered from SAP fraud prevention plan. registered with SAPS at year end, 172 were opened during the year. through this settlement agreement. We continue to work closely By year end, a total of 15 cases were at trial stage at various magistrate with the SIU and monitor civil recovery and criminal proceedings and specialist commercial crimes courts. A further 45 cases have been Forensic investigations to intervene where legal outcomes on these matters remain slow. through the criminal proceedings provided for under the Criminal Procedure Act, 1977. 7 132 (2023: 7 963) 380 (2023: 305) A number of interventions have been put in place to improve the ADDRESSING SECURITY RISKS incidents registered through cumulative cases under effectiveness of consequence management processes, including the The Energy Safety and Security Priority Committee of the NECOM is reporting channels for investigation at year end, relating establishment of an external disciplinary tribunal, consisting of internal working to assist in expediting those criminal cases we have reported assessment on the forensic case to current and prior years and external experts, to support Eskom’s human resources function to to law enforcement authorities and to combat criminal activities which management system expedite disciplinary action and address the backlog of cases; training of threaten our operational sustainability. Theft of electrical cable, coal, fuel disciplinary chairs and case presenters; as well as monitoring and evaluation oil and diesel, as well as threats of sabotage, receive priority attention. 195 (2023: 278) 120 (2023: 227) at executive and Board level of long outstanding disciplinary actions. During the year, the committee has been successful in securing several new cases registered for forensic forensic investigations concluded preservation orders relating to illegal mining in Mpumalanga. We are also implementing automated systems in the procurement of investigation goods and services and management of spend, including price check As a result of the scale of our operations in Mpumalanga, the Hawks tools, digitalisation of stock control and e-auction systems, to proactively is now handling all Eskom cases in Mpumalanga through a single address risks related to crime, fraud and corruption. Technology investigation team. This approach aims to enhance the efficiency of Sanctions developments are being monitored to identify further opportunities investigations as well as collaboration with the National Prosecuting across these areas. We have appointed a service provider to assist with Authority (NPA) in achieving successful prosecutions. Since inception of 167 (2023: 223) 30 (2023: 54) the use of data analytics to identify transactions and anomalies that should be investigated for potential crime, fraud and corruption as well as the strategy to combat coal, fuel oil and diesel theft in April 2022, over 50 arrests have been made and more than 20 illegal coal swapping sites employees recommended for suppliers recommended for build this capability within Eskom. have been closed. disciplinary action review to the Supplier Review Committee In instances where forensic investigations have revealed that suppliers As a state-owned company, our directors and employees are entrusted have failed to declare a potential conflict of interest and have been with sensitive and valuable information as well as access to critical proven to have benefitted unduly, a supplier review process is followed. infrastructure. In the interest of national security, we are obligated to safeguard information and assets from unauthorised disclosure and 330 (2023: 158) Our Supplier Review Committee investigates cases of misconduct and recommends disciplinary action against suppliers, which may include access. During the year, we established a security vetting programme in cumulative cases of fraud and corruption registered with SAPS at removal from Eskom’s supplier database as well as recommendations to collaboration with the State Security Agency (SSA) to conduct security year end National Treasury for restriction on the national supplier database. Our clearance assessments, in line with the shareholder’s expectations. focus remains on addressing the backlog of supplier disciplinary cases and A security vetting policy was approved by Exco and implemented Regrettably, our forensic investigations have revealed similar themes responding to new cases as they arise. with effect from 1 January 2024. By year end, 206 security clearance to previous years, with instances of procurement and recruitment The status of 90 suppliers was considered during the year. Thirty-two certificates were issued to employees across the high-risk areas irregularities, failure to declare conflicts of interest by both suppliers suppliers received sanctions for removal from Eskom’s supplier database, prioritised in the first phase. We have concluded an agreement with and employees, as well as other corrupt and fraudulent activities. Non- of which 30 were also recommended for referral to National Treasury the SSA to establish a vetting fieldwork unit (VFU), given the size of compliance with Eskom’s well-documented policies and procedures for restriction. Thirty suppliers received suspended sanctions, to be our organisation. The VFU has been fully established during the 2025 as well as lack of management supervision and monitoring remain a removed from Eskom’s supplier database if any further non-compliance financial year. concern. Where control deficiencies are identified during an investigation, is committed during the suspension period. The remaining 28 suppliers control enhancements are recommended for implementation to prevent were recommended for no further action. 56 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Promoting an ethical culture continued STRENGTHENING PFMA COMPLIANCE Nonetheless, the cumulative balance of irregular expenditure remains Losses due to criminal conduct of R6.7 billion were reported during Eskom has once again received a qualified opinion relating to the high, mainly due to limited progress in receiving the necessary the year (2023: R6 billion), of which the majority related to estimated quantification and disclosure of information required in terms of the condonations and removing historical irregular expenditure. Regrettably, non-technical energy losses arising from electricity theft, including ghost PFMA, as associated financial records were not complete or accurately obtaining the necessary supporting documents for historical matters vending. Investigations related to non-technical energy losses are ongoing maintained in line with legislative requirements. The auditors have raised remains a challenge. We are committed to rectifying past mistakes and and we are collaborating with other state-owned entities, industry role material findings in respect of the lack of completeness and accuracy of ensuring accountability. players, SAPS and the NPA to combat these losses. Eskom’s reported PFMA information, compliance with specific matters During the year, we received notice of condonations from National and key legislation, as well as significant internal control deficiencies.  ctions to address non-technical energy losses are discussed under IR A Treasury to the value of R1.2 billion related to 45 matters, and recovered “Our infrastructure – Energy losses and equipment theft” from page 78 We are actively seeking ways to enhance PFMA compliance and develop a further R500 million (excluding VAT) related to the SAP contract a proactive response to PFMA-related audit qualifications. Unfortunately, mentioned earlier. Condonations are only granted by National Treasury if this requires a multi-year approach due to the impact of the PFMA on the the necessary investigations have been concluded; criminal charges have REPORTABLE IRREGULARITIES RAISED BY THE EXTERNAL entire organisation. Our PFMA compliance status is being continuously been laid in the case of fraudulent, corrupt or other criminal conduct; AUDITORS assessed and we have identified areas where non-compliance remains a and disciplinary processes and remedial action have been undertaken to In terms of section 45 of the Auditing Profession Act, 2005, the external challenge. A detailed action plan to address the audit qualification is being prevent recurrence of the irregular expenditure. auditors are required to report any reportable irregularities (RIs) to the enhanced and finalised with clear objectives, timelines and responsible Independent Regulatory Board for Auditors, and only then report the areas. The focus of instilling a culture of self-declaration and reporting, We are finalising procedures and related controls around the removal process for uncondoned irregular expenditure, to minimise the continued matter to management to afford them an opportunity to respond to and the timeliness thereof, is an area that requires enhancement. and/or rectify the matter. impact of historical matters on the cumulative irregular expenditure PFMA training which is aligned to the latest National Treasury regulations balance. ARC acknowledged that certain RIs will recur and remain open until all is mandatory for all employees to ensure that they understand their The closing balance of fruitless and wasteful expenditure amounted related aspects have been concluded, as it takes time to resolve these responsibilities and the importance of PFMA compliance. We are to R6.1 billion at year end (2023: R6.1 billion). The balance for the matters because of their inherent nature. also considering ways to enhance and strengthen internal controls to improve PFMA compliance, and ensure that individuals responsible comparative period has been restated and reduced by R710 million for non-compliance with the PFMA are held accountable. A dedicated due to prior period errors. Only R1 million, relating to 12 incidents, AFS Details of reportable irregularities, as well as the action taken and status communication channel has been created to enhance communication on was confirmed as fruitless and wasteful expenditure incurred during of the respective matters, are discussed in note 52 in the annual financial PFMA-related matters throughout the organisation. the 2024 financial year. A further R4.6 billion, of which R3.5 billion statements relates to incidents from prior periods, is undergoing the assessment At 31 March 2024, the cumulative balance of irregular expenditure and determination process before it can be confirmed and disclosed as amounted to R98.7 billion (2023: R95.6 billion), the vast majority of fruitless and wasteful expenditure. which relates to historic transgressions. Irregular expenditure incurred during the 2024 financial year totalled R4.7 billion, with R0.4 billion relating to new matters. Note that the PFMA amounts reported are exclusive of VAT.  isclosure of PFMA information is set out in note 51 in the annual AFS D financial statements as well as in the supplementary information in this report from page 128 The balance for the comparative period has been restated, increasing by R4.4 billion, largely as a result of prior period errors from expenditure that was only confirmed as irregular in the current year. The process of collecting information and reporting on irregular expenditure continues to be a focus area, although it is expected that new instances of irregularities will be detected as we continue our governance clean-up exercise. 57 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Performance review Condensed annual financial statements 59 Our finances 63 Our infrastructure 70 Our interaction with the environment 83 Our people 93 Our role in communities 100 58 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Condensed annual financial statements The financial results set out in the condensed financial statements that CONDENSED GROUP INCOME STATEMENT Sales volumes per customer category follow have been extracted from the financial statements of the Eskom for the year ended 31 March 2024 Holdings SOC Ltd group for the year ended 31 March 2024. The financial <1% 6% 3% statements have been prepared in accordance with IFRS Accounting Restated 5% Standards and in the manner required by the Companies Act, 2008 and 2024 2023 the PFMA, 1999. Rm Rm % Ref 5% Revenue 295 814 259 543 14 1 The financial statements have been prepared under the supervision of Other income 1 295 2 742 53 the Group Chief Financial Officer, Mr Calib Cassim CA(SA), and were 41% Primary energy (173 729) (156 819) 11 2 duly approved by the Board of Directors on 18 December 2024. 3 2024 Employee benefit expense (35 096) (32 321) 9 15% The financial statements have been audited by the group’s independent Net impairment loss and (3 433) (2 182) 57 auditors, Deloitte & Touche, in accordance with the Public Audit Act of write-downs South Africa, 2008, the General Notice issued in terms thereof as well as Other expenses (41 441) (36 398) 14 4 International Standards on Auditing. The independent auditors issued a Profit before depreciation and qualified opinion relating to the quantification and disclosure of information amortisation expense and net fair 43 410 34 565 26 5 required in terms of the PFMA, 1999. Except for this qualification, the value and foreign exchange gain/ 24% financial statements are considered to be fairly presented in terms of (loss) (EBITDA) IFRS Accounting Standards. Furthermore, the independent auditors have Depreciation and amortisation Distributors Industrial Mining Commercial (33 239) (31 941) 4 Residential Agriculture Rail International emphasised a number of matters in their report, including a material expense uncertainty relating to Eskom’s ability to continue as a going concern. Operating profit (EBIT) 10 171 2 624 288 Sales volumes and revenue However, these matters do not affect their opinion. Net fair value and foreign 2 644 (285) 1 028 6 R billion TWh exchange gain/(loss) +14% Revenue AFS T he financial statements, which detail the financial performance of the 350 -3% Sales volumes 210 Profit before net finance cost 12 815 2 339 448 group and company and accompanying notes, are available online 205 Net finance cost (38 389) (37 015) 4 7 300 250 200 Finance income 4 859 3 365 44 The income statement and statement of financial position for the 2023 Finance cost (43 248) (40 380) 7 195 financial year have been restated. Certain changes in the measurement 200 of power station-related environmental restoration and mine-related Share of profit of equity- 190 105 93 13 150 closure, pollution control and rehabilitation provisions were incorrectly accounted investees after tax 185 credited to profit or loss instead of being deducted from the cost of the 100 Loss before tax (25 469) (34 583) 26 180 related assets in terms of IFRIC® Interpretation 1 Changes in Existing 8 Income tax (29 546) 8 501 448 50 Decommissioning, Restoration and Similar Liabilities, issued by the IFRS 175 Interpretations Committee. The restatement had no impact on the Loss for the year (55 015) (26 082) 111 0 170 statement of cash flows other than the note disclosure relating to cash 2020 2021 2022 2023 2024 generated from operations, with no overall impact on net cash from Income/gain increased Income/gain decreased Revenue Sales volumes operating activities. Cost/loss decreased Cost/loss increased All financial information presented in this report reflects the restated 1. REVENUE IR Refer to page 121 for the number of customers by customer segment, as results where applicable. A standard tariff increase of 18.65% for the year, partially offset by a well as electricity sales by customer category for the past five years, for both volumes and revenue 5.1TWh (3%) decline in sales volumes. AFS Refer to note 48 in the financial statements for more information on the Distributor (3.4TWh ), international (1.1TWh ) and residential Revenue excludes R8.9 billion in net amounts not recognised prior period restatements (0.6TWh ) customer segments showed the largest decline in sales (2023: R8.2 billion), relating to sales to customers that failed to meet collectability criteria in terms of accounting standards because of a low volumes. Sales were negatively affected by generation supply constraints, Neither the future performance plans nor strategies referred to in the likelihood of recovery. caused by poor Eskom generation plant performance, delays in IPP integrated report have been reviewed or reported on by the group’s programmes and lower-than-budgeted imports, as well as an increase in embedded self-generation capabilities across many sectors. Given South independent auditors. Africa’s supply constraints, international customers were subject to load curtailment and, therefore, had to place less reliance on Eskom supply. 59 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Condensed annual financial statements continued 2. PRIMARY ENERGY programmes as well as the RMIPPPP, which have not delivered capacity in line 5. EBITDA Primary energy costs increased despite a 4TWh (2%) decrease in with our expectations, further contributed to the need to rely on OCGTs. The biggest contributor to the improvement in EBITDA was the growth production, as poor performance at coal-fired power stations required in revenue, driven by the standard tariff increase of 18.65% for the year. higher production from more expensive OCGT and short-term IPP sources. Unit cost, R/MWh 2024 2023 % change 6. NET FAIR VALUE AND FOREIGN EXCHANGE GAIN Primary energy production breakdown Coal 541 503 8 Favourable fair value movements were recognised on hedging instruments, Nuclear 113 106 7 associated with credit risk adjustments, as well as exchange rate and interest 9.2TWh 20.2TWh Eskom-owned OCGTs1 6 579 7 077 7 rate movements. A fair value gain was also recorded on embedded derivatives (4%) (9%) IPPs2 2 367 2 326 2 arising from negotiated pricing agreements (NPAs) with customers, with tariffs 3.6TWh (2%) IPP OCGTs3 6 348 7 278 13 linked to commodity prices and foreign exchange rates. Renewable IPPs 2 029 1 986 2 8.2TWh Other IPP programmes3 1 018 – – Year-end EUR/ZAR 20.51 (2023: 19.30) (4%) International purchases2 883 748 18 Year-end USD/ZAR 18.98 (2023: 17.72) 1. The unit cost of OCGTs is calculated based on the gross fuel cost (excluding the 2024 diesel levy refund) for comparability purposes. The unit cost excludes storage and 7. NET FINANCE COST demurrage costs, but includes environmental levies. Growth in finance costs arose due to a higher average cost of borrowing, 2. The unit cost of IPPs and international purchases is based on the full cost of operation, 172.8TWh whereas the unit cost of Eskom-owned generation is based only on the primary linked to global inflation, interest rate and exchange rate pressure. This (81%) energy cost. Given that IPP and international purchases are treated as a variable cost was partially offset by growth in finance income due to a higher average in Eskom’s accounts, this is considered appropriate. return on treasury and insurance investments, linked to an increase in 3. The unit cost is calculated on the net amount spent on energy, excluding capacity interest rates. charges, and after the lease accounting adjustment. Primary energy cost breakdown 3. EMPLOYEE BENEFIT EXPENSE Average cost of debt 10.90% (2023: 10.48%) R6.8 billion R2.8 billion (4%) The increase is due to a 3% growth in headcount, together with a 7% Average investment return 8.27% (2023: 6.08%) (2%) remuneration adjustment approved for all employees up to senior management level. Decisions around remuneration and benefits take into Reconciliation of net finance cost, % R47.8 billion account our financial challenges and sustainability, in compliance with the R billion 2024 2023 change (27%) conditions attached to the Eskom Debt Relief Act, 2023 as amended. Debt securities and borrowings 37.3 33.7 10 R83.8 billion Derivatives held for risk management 3.7 5.1 28 2024 (48%)  emuneration and benefits are discussed in further detail under “Our IR R Provisions 6.3 5.1 24 people – Remuneration and benefits” on page 97 Other1 4.0 3.9 2 R8.1 billion Gross finance cost 51.3 47.8 7 Overtime costs remain a concern, increasing by 20% to R3 billion due to high Cost of borrowings capitalised to assets (7.5) 8 (5%) R0.6 billion (8.1) R23.9 billion levels of unplanned maintenance mainly in Generation (2023: R2.5 billion). (<1%) Finance cost 43.2 40.4 7 (14%) Coal and other generation Nuclear generation 4. OTHER OPERATING EXPENSES Finance income (4.9) (3.4) 44 Eskom OCGTs Electricity imports Higher maintenance and plant operating costs were incurred to address Net finance cost 38.4 37.0 4 IPPs Environmental levies poor generation plant performance. Repairs and maintenance spend Other increased to R28.7 billion (2023: R22.1 billion) to address unplanned 1. Includes finance costs on employee benefit obligations, lease liabilities as well as trade generation plant losses, together with higher planned maintenance in line and other payables. Coal generation costs grew by 5% due to inflationary cost pressures, with the Generation Recovery Plan. driven in part by a 6.6% increase in the average coal purchase price, offset by a 3% decline in production from coal-fired stations. Expenditure on AFS Refer to notes 39 and 40 in the financial statements for further detail RE-IPPs increased to R36.2 billion, with higher production of 17.9TWh Repairs and maintenance spend (2023: R33.4 billion to produce 16.9TWh). 8. INCOME TAX Generating plant R22.8 billion (2023: R16.6 billion) 38% A combined R33.9 billion was incurred to produce 5.1TWh from Eskom- A deferred tax asset of R36.6 billion at 31 March 2024 has been Transmission network R1.1 billion (2023: R1.2 billion) 3% derecognised based on the recoverability assessment conducted at year owned and IPP OCGTs (2023: R29.6 billion to produce 4.1TWh) to avoid or minimise loadshedding. Favourable diesel price movements enabled higher Distribution network R4.8 billion (2023: R4.4 billion) 8% end. Refer to the statement of financial position on the next page for production from OCGTs than originally anticipated. Delays in short-term IPP further information. 60 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Condensed annual financial statements continued 1. PROPERTY, PLANT AND EQUIPMENT AND 6. DERIVATIVES HELD FOR RISK MANAGEMENT INTANGIBLE ASSETS Net derivative assets increased due to the weakening of the CONDENSED GROUP STATEMENT OF FINANCIAL POSITION Additions from capital expenditure and other capitalised costs, Rand as well as credit risk and hedge effectiveness adjustments. at 31 March 2024 primarily on generating plant, partially offset by depreciation. 7. TRADE AND OTHER RECEIVABLES Restated 2. FUTURE FUEL SUPPLIES The increase in trade receivables was largely attributable to 2024 2023 Additions to coal and nuclear fuel supplies, as well as capitalisation growth in municipal and metro debtors, in part due to the Rm Rm % Ref of associated decommissioning provision costs. higher tariff for the year. This was partially offset by an increase in the impairment of trade receivables based on the expected Assets Non-current assets 750 872 741 092 1 3. INVENTORIES credit loss model. Property, plant and equipment and intangible assets 684 388 671 709 2 1 A portion of coal inventory is recognised as non-current, based Refer to note 5.1 in the financial statements for further information Future fuel supplies 6 782 5 290 28 2 on the quantity of coal held and usage patterns at power stations. on the credit risk associated with trade and other receivables. Investment in equity-accounted investees and subsidiaries 346 350 1 The overall increase is largely attributable to growth in working Inventories 13 297 12 209 9 3 capital requirements, particularly in coal, liquid fuel, maintenance 8. CASH AND CASH EQUIVALENTS Loans receivable 7 565 7 823 3 spares and consumables in line with the Generation Recovery Liquidity was bolstered by the receipt of R76 billion in Deferred tax 81 17 983 99 4 Plan and initiatives to improve coal stock levels. shareholder loans through the Eskom Debt Relief Act, 2023 as Embedded derivatives 10 486 772 1 258 5 amended, to assist us in meeting our debt servicing requirements. Derivatives held for risk management 18 881 17 633 7 6 4. DEFERRED TAX Refer to the condensed group statement of cash flows on the Other non-current assets 9 046 7 323 24 In terms of IAS 12 Income taxes, a company must recognise a next page for further detail on operating, investing and financing Current assets 115 450 84 652 36 deferred tax asset in respect of its unused tax losses to the cash flows for the year. 18 3 extent that it will generate sufficient future taxable income. Inventories 28 293 24 014 9. CAPITAL AND RESERVES 16 Due to the disposal of the Transmission business to NTCSA on Loans receivable 208 247 The decline in equity is a result of the R55 billion net loss after 2 478 5 31 March 2024, the evaluation of the extent to which the Eskom Embedded derivatives 1 315 51 tax recorded for the year, due mostly to the derecognition of Derivatives held for risk management 9 359 13 6 company will generate future taxable income had to exclude 8 135 the deferred tax asset at 31 March 2024 discussed earlier. This Trade and other receivables 26 702 35 7 amounts attributable to the Transmission business which will now 35 975 was partially offset by shareholder loans of R44 billion which Investments 15 629 5 accrue to NTCSA. Furthermore, taxable temporary differences 16 478 have been approved for conversion to equity by the Minister Other current assets 1 134 29 of R37.4 billion were transferred to NTCSA, thereby reducing the 1 461 of Finance, based on Eskom’s compliance with the conditions of Cash and cash equivalents 23 585 7 516 214 8 taxable temporary differences that remain in the Eskom company. the Eskom Debt Relief Act, 2023 as amended. At year end, this Total assets 866 322 825 744 5 A recoverability assessment of Eskom’s deferred tax asset amount was recognised as other equity as the related shares concluded that, despite Eskom expecting to return to a tax were issued after year end, in April 2024. Equity Capital and reserves 233 944 5 9 paying position within the next five years, there is no persuasive 222 858 10. DEBT SECURITIES AND BORROWINGS evidence that the Generation business, which is expected Liabilities Debt of R23.6 billion was raised in compliance with the Eskom Non-current liabilities 486 657 473 282 3 to remain in Eskom company after the legal separation of Transmission and Distribution, will generate sufficient taxable Debt Relief Act, 2023 as amended, offset by R54.6 billion Debt securities and borrowings 359 692 367 993 2 10 repaid, together with interest, accruals and discounting to 89 6 income over the five-year forecast period against which unused Derivatives held for risk management 27 241 present value. Foreign-denominated borrowings were also 100 4 tax losses can be utilised. Deferred tax 10 412 – subject to exchange rate volatility and increased in Rand terms Contract liabilities and deferred income 34 687 26 078 33 11 Therefore, a deferred tax asset of R36.6 billion was because of the weakening of the Rand. Non-current debt is Employee benefit obligations 17 448 16 902 3 derecognised at 31 March 2024. The derecognition has no reclassified as current debt as maturities fall due. Provisions 52 561 50 143 5 12 impact on Eskom’s right to utilise its unused tax losses against Lease liabilities 6 553 7 415 future taxable income. Refer to note 14 in the financial 11. CONTRACT LIABILITIES AND DEFERRED INCOME Other non-current liabilities 5 277 4 510 17 statements for further information. The increase is largely attributable to day 1 fair value gains on Current liabilities 156 807 118 518 32 contracts with embedded derivatives, together with growth Debt securities and borrowings 52 508 55 936 6 10 5. EMBEDDED DERIVATIVES in customer connections and deferred income associated with Loan from shareholder 32 000 – 100 12 Embedded derivatives relate to existing NPAs with aluminium grants received for Government’s electrification programme. Derivatives held for risk management 566 1 788 68 6 smelters as well as the implementation of new NPAs for Payments received in advance 4 300 4 026 7 ferrochrome industrial customers from January 2024. The tariffs 12. LOAN FROM SHAREHOLDER Employee benefit obligations 3 777 3 584 5 under these NPAs cater for commodity prices and foreign The remaining R32 billion in debt relief support, received during Provisions 9 325 5 914 58 exchange rates that exceed predefined thresholds. The day 1 the fourth quarter, was recognised as a liability at year end as Trade and other payables 49 664 44 264 12 fair value gains recognised on the new ferrochrome embedded it would only be assessed for compliance with the debt relief Other current liabilities 4 667 3 006 55 derivatives have resulted in a corresponding increase in the conditions and considered for conversion to equity in the 2025 associated contract liabilities with these customers. Refer to financial year. The Minister of Finance approved the conversion Total liabilities 643 464 591 800 9 note 4.1 in the financial statements for further information. on 29 July 2024, based on Eskom’s continued compliance with the Total equity and liabilities 866 322 825 744 5 conditions, and the related shares were issued in August 2024. Asset/equity increased Asset/equity decreased Liability decreased Liability increased 61 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Condensed annual financial statements continued CONDENSED GROUP STATEMENT OF CASH FLOWS for the year ended 31 March 2024 Restated 1. CASH FLOWS FROM OPERATING ACTIVITIES 2024 2023 The improvement in profitability was largely offset by growth in working capital, Rm Rm % Ref mainly due to the extension of municipal payment terms from 15 days to 30 days to Cash flows from operating activities comply with the conditions of Government’s municipal debt relief programme. In Loss before tax (25 469) (34 583) 26 addition, there was growth in coal, liquid fuel, maintenance spares and consumables Adjustment for non-cash items 79 563 78 872 1 required by the Generation Recovery Plan and to address coal stock levels. Changes in working capital (13 579) (2 320) 485 Net operating cash flows of R40.4 billion remain inadequate to meet total debt Cash generated from operations 40 515 41 969 3 servicing requirements of R89.8 billion, comprising interest of R35.3 billion and Net cash from derivatives held for risk management 794 97 719 capital of R54.6 billion. This emphasises the negative impact of the lack of cost- Finance income received 412 462 11 reflective tariffs, combined with our operating challenges, on operating cash flows, Finance cost paid (4) (109) 96 resulting in the need for Government debt relief to strengthen the balance sheet. Income taxes paid (1 321) (892) 48 Net cash from operating activities 40 396 41 527 3 1 2. CASH FLOWS USED IN INVESTING ACTIVITIES Investing activities relate mainly to capital expenditure on the new build programme, Cash flows used in investing activities Generation outages and technical plan requirements, as well as the investment in Proceeds from disposal of property, plant and equipment and intangibles 1 082 746 45 transmission and distribution network infrastructure. Acquisitions of property, plant and equipment and intangibles (42 577) (31 865) 34 Acquisitions of future fuel supplies (2 857) (3 137) 9 3. CASH FLOWS FROM FINANCING ACTIVITIES Acquisitions of treasury investments (1 002) – 100 Financing activities include debt raised of R23.6 billion, net of commercial paper, offset Net (acquisitions of )/proceeds from insurance investments (1 735) 647 368 by total debt servicing outflows of R89.8 billion. Government’s debt relief support of Payments made in advance (101) (442) 77 Cash used in provisions (135) (1 900) 93 R76 billion was necessary to meet these obligations, although Eskom did have to fund a Net cash used in derivatives held for risk management (221) (18) 1 128 portion of the debt service requirements from available funds. Net cash from loans receivable and finance lease receivables 84 109 23 Dividends received 183 254 28 Finance income received 2 336 1 792 30 Net cash used in investing activities (44 943) (33 814) 33 2 Cash flows from/(used in) financing activities Debt securities and borrowings raised 23 562 29 603 20 Loan from shareholder raised 76 000 – 100 Payments made in advance (426) (369) 15 Debt securities and borrowings repaid (54 594) (39 110) 40 Share capital issued – 21 857 100 Net cash from derivatives held for risk management 10 992 4 894 125 Net cash used in lease liabilities and financial trading liabilities (721) (689) 5 Finance income received 1 110 789 41 Finance cost paid (35 255) (33 069) 7 Taxes paid (71) (58) 22 Net cash from/(used in) financing activities 20 597 (16 152) 228 3 Net increase/(decrease) in cash and cash equivalents 16 050 (8 439) 290 Cash and cash equivalents at the beginning of the year 7 516 15 885 53 Foreign currency translation 6 33 82 Effect of movements in exchange rates on cash held 13 37 65 Cash and cash equivalents at the end of the year 23 585 7 516 214 Inflow increased Inflow decreased Outflow decreased Outflow increased 62 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances The group recorded a loss before tax of R25.5 billion Revenue Primary energy costs Repairs and maintenance spend EBITDA for the year (2023: R34.6 billion). The improvement is largely attributable to the growth in revenue on the 14%  11%  30%  26%  back of an 18.65% standard tariff increase. to R295.8 billion, mainly due to an to R173.7 billion to R28.7 billion to address poor to R43.4 billion, reducing the loss Despite this increase, profitability remains hampered 18.65% tariff increase 2024 173.7 generation plant performance before tax to R25.5 billion by a lack of cost-reflective tariffs, poor generating plant performance, above-inflationary cost increases in some 2024 295.8 2023 156.8 2024 28.7 2024 43.4 areas, non-payment by municipalities, high finance costs 2023 22.1 2023 34.6 associated with our significant debt burden, as well as 2023 2022 259.5 132.9 losses associated with criminal and fraudulent activities. 2022 247.6 2022 19.1 2022 53.0 Collectively, these challenge our ability to achieve financial and operational sustainability, contribute to our liquidity constraints and jeopardise our ability to continue as a going concern. R76 billion Credit rating Arrear municipal debt escalated to Group-funded capital expenditure Returning to profitability and improving our solvency in Government debt relief received upgrades R74.4 billion 9%  ratios in a sustainable manner requires successful implementation of the financial recovery turnaround to strengthen the balance sheet and based on poor compliance with the to R37 billion, together with received from Moody’s and objectives, each of which is discussed in more detail support our going concern status municipal debt relief conditions growth in working capital, to below. Standard & Poor’s on the back of support the Generation Government’s debt relief support 2024 74.4 Recovery Plan 2023 58.5 Financial recovery 2022 44.8 Pursue the migration to cost-reflective tariffs Achieve sustainable turnaround cost savings Deleverage the balance sheet through Government Financial capital is fundamental to our sustainability as an organisation. Financial and operational performance are intrinsically connected, as poor operational performance has a support detrimental impact on financial results and, conversely, financial challenges and liquidity constraints hinder our ability to address operational challenges and deliver on strategic objectives. Address arrear municipal debt and non-payment by We make use of financial capital in the form of debt or equity to fund our operations. To ensure financial sustainability, equity should ideally be created through profits municipalities generated by sufficient revenue to cover our costs, otherwise through financial support received from our shareholder. PURSUING COST-REFLECTIVE TARIFFS FINANCIAL RATIOS Cost-reflective tariffs are critical to our financial sustainability. This means that the allowable revenue Target Target Target Target Actual Actual Actual determined by NERSA must be sufficient to cover Measure and unit 2027 2025 2024 met? 2024 2023 2022 the prudent and efficient costs that we incur to supply Company electricity to customers, while providing a fair return on assets that at least covers our weighted average Electricity revenue per kWh (including environmental levy), c/kWh 233.27 184.52 164.27 165.43 141.38 127.32 cost of capital. Electricity operating costs, R/MWh 1 896.12 1 425.36 1 319.84 1 384.77 1 207.29 992.80 The lack of cost-reflective tariffs has been an ongoing Group challenge since 2006 and is one of the main reasons for our financial constraints, together with the EBITDA, R millionSC, 1 103 050 67 120 54 169 43 410 34 565 52 954 reliance on debt to fund our new build programme. EBITDA margin, % 23.27 21.27 17.50 14.67 13.32 21.39 In part, the historic reliance on debt has been a Current ratio2 0.89 1.11 1.10 0.98 0.89 0.90 symptom of insufficient operating cash flows to fund Free funds from operations (FFO), R million 109 350 64 624 54 815 53 975 43 847 63 795 capital expenditure because of the inadequate tariff FFO after net interest paid, R million 85 443 29 457 19 589 19 830 11 567 31 904 path. The migration towards cost-reflective tariffs, therefore, remains a key priority for turning around 1. The financial results for 2023 have been restated due to a change in accounting treatment. Full details are available in note 48 of the financial statements. financial performance. 2. Refer to the glossary of terms on page 107 for detail on the current assets and liabilities used in the calculation of the current ratio. 63 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances continued Tariff path COURT REVIEW APPLICATIONS RELATING TO PREVIOUS Both the Democratic Alliance and the South African Local Government FINANCIAL YEARS Association (SALGA) submitted court review applications to challenge MYPD 5 As discussed in previous reports, recent revenue and regulatory clearing NERSA’s allowable revenue determinations for 2024 and 2025. The Approved by NERSA account (RCA) decisions by NERSA have not aligned to the principles hearings took place in September 2023 and the High Court issued its of the multi-year price determination (MYPD) methodology and have judgment in December 2023, dismissing the applications. In April 2024, 2023 2024 2025 also not enabled the migration towards cost reflectivity. Eskom has SALGA’s application for leave to appeal was dismissed with costs and it is 9.61% 18.65% 12.74% unlikely that they will continue with further appeals. lodged several review applications with the courts to challenge these determinations. Developments since last year’s report are discussed MYPD 6 application1 below. OTHER COURT REVIEW APPLICATIONS AND DECISIONS Subject to NERSA’s determination UNDERWAY REVENUE DECISION FOR THE 2023 TO 2025 FINANCIAL YEARS The legal processes for several review applications are still underway, 2026 2027 2028 (MYPD 5) which collectively relate to the recovery of an estimated R50 billion. 36.15% 11.81% 9.10% NERSA’s allowable revenue determination for the 2024 financial year Regrettably, there have been no significant developments in these translated to an effective average standard tariff increase of 18.65%, which applications, which include the RCA decisions for the 2015 to 2017 1. The tariff path shown represents Eskom’s MYPD 6 application, the outcome of which was implemented in the schedule of tariffs from 1 April 2023. For the financial years (MYPD 3); the RCA decision for 2018 (MYPD 3); the is still to be determined. 2025 financial year, an effective average standard customer tariff increase revenue and RCA decisions for 2019; as well as the RCA decision for of 12.74% was determined, for implementation from 1 April 2024. In 2020 (MYPD 4). We are engaging with NERSA to agree on a way large part, these increases were due to favourable judgments arising from forward for the court review applications relating to these decisions. previous court review applications and RCA decisions. Progress on the RCA applications for 2021, 2022 and 2023 is summarised below. Eskom application NERSA decision Progress RCA decision for the 2021 financial year (MYPD 4) R10.7 billion in favour of Eskom R204 million in favour of the consumer We are reviewing NERSA’s decision on a similar basis as previous RCA decisions, as it is evident that NERSA has not implemented previous court- (submitted in November 2021) (approved in May 2023) ordered decisions when making this decision. We lodged a case in October 2023 and a court date was scheduled for June 2024, although the date was subsequently withdrawn to allow NERSA to make a decision on its approach to the court application. RCA decision for the 2022 financial year (MYPD 4) R23.9 billion in favour of Eskom R8.1 billion in favour of Eskom In June 2023, NERSA published the RCA application for stakeholder consultation. A public hearing was held in August 2023 and NERSA was expected to (submitted in April 2023) (approved in July 2024) announce a decision by December 2023, although this was postponed. An RCA balance of R8 095 million in favour of Eskom was approved at NERSA’s Energy Regulator meeting on 30 July 2024. We are awaiting the reasons for decision as well as NERSA’s decision on the timing of the RCA liquidation in order to determine a way forward. RCA decision for the 2023 financial year (MYPD 5) R9 million in favour of Eskom (submitted No decision to date This RCA application was considerably lower than previous years due to the revenue variance arising from the negative impact of loadshedding on sales in January 2024) volumes. NERSA published the application for public consultation in April 2024. The public hearings planned for August 2024 did not take place due to limited interest. NERSA is expected to make a decision in December 2024. The RCA application for the 2024 financial year will be prepared in accordance with the existing MYPD methodology, based on the published financial statements for the year. PROGRESS ON MYPD 6 REVENUE APPLICATION COVERING FUTURE FINANCIAL YEARS Since 2021, NERSA has been consulting on the implementation of a new electricity price determination methodology (EPDM). Implementation of the EPDM rules was approved at NERSA’s energy regulator meeting in December 2023, with the reasons for the decision published on 26 January 2024. Although no formal communication on the implementation date had been received, it was understood that NERSA wished to implement the new rules for the 2026 financial year, from 1 April 2025. Stakeholders raised considerable concerns on the practicality of implementing these rules as they are a major departure from the existing MYPD methodology and the Eskom Retail Tariff and Structural Adjustment (ERTSA) process, the most significant being the lack of an RCA mechanism. The new methodology is likely to threaten the recovery of prudent and efficient costs, and several risks have been highlighted to NERSA during its public hearings. Subsequently, NERSA rescinded its decision to implement the EPDM rules at its Energy Regulator meeting in June 2024. NERSA has undertaken to develop a plan to clarify the approach to processing and evaluating future revenue and tariff applications. Any approach will have to comply with the Electricity Pricing Policy and the Electricity Regulation Act, 2006 as amended. 64 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances continued We have communicated to NERSA that we will be implementing the CONTROLLING EXPENDITURE During the 2025 financial year, we have established a programme to court judgment obtained in 2021, following NERSA’s initial rejection of A significant focus of our turnaround plan is improving our financial enhance operational efficiency and reduce costs, aimed at returning Eskom our MYPD 5 application. At the time, NERSA rejected the application performance through sustainable cost curtailment and efficiencies, as well to profitability in the short to medium term. The additional savings being on the basis that it intended to develop a revised pricing methodology. as realising opportunities for other income. targeted through this programme will be from primary energy optimisation, The High Court judgment required that NERSA implement the prevailing procurement efficiencies, digital transformation and capital productivity, methodology when considering an application. Turnaround savings, R billion together with revenue growth opportunities. Therefore, we have prepared our three-year MYPD 6 revenue application in Using 2018 baseline Using 2023 baseline accordance with the prevailing MYPD methodology published in 2016. We ADDRESSING ESKOM’S DEBT BURDEN submitted the application to NERSA in August 2024, following consultation GOVERNMENT SUPPORT with SALGA and National Treasury. The application translates to proposed Addressing our debt burden is a key component of the turnaround standard tariff increases for the 2026 to 2028 financial years of 36.15%, 11.81% 15.6 plan to resolve the organisation’s long-term financial sustainability. and 9.10%, and includes a gradual increase in Eskom’s return on assets to 4%, Government support remains the primary enabler for servicing our debt 5% and 6% respectively, to minimise the market impact and enable a migration and strengthening our balance sheet over time. towards cost-reflectivity over time. However, these remain far below Eskom’s 10.4 cost of capital of almost 11%. NERSA published the application for stakeholder Government debt relief support, R billion 22.4 comment in September 2024. The outcome of the application will only be Direct support to address debt servicing Takeover of known once NERSA issues its revenue determination, following the public costs as they fall due debt servicing 5.4 consultation process planned for November and December 2024. Received as a shareholder loan, convertible To be transferred 9.9 RESTRUCTURING OF TARIFFS to equity if certain conditions are met off Eskom’s 5.4 5.0 5.2 As previously reported, we submitted proposals for the restructuring of balance sheet tariffs to NERSA in 2020, as existing tariff structures do not accurately 2024 2024 2025 2026 2027 reflect the true component costs of electricity supply, particularly the Actual Target Target Target Target allocation between fixed and variable costs. Furthermore, tariffs need Cumulative target to be modernised to address the legal separation of Eskom and the restructuring of the electricity supply industry. 1. Eskom requested the shareholder to amend the target for the 2024 financial year to 76 R10.5 billion, based on a revised methodology using the 2023 financial results as a 70 Key among these proposals was to address the recovery of fixed baseline. The shareholder denied this request, although the revised methodology and 64 generation costs through a capacity charge rather than through volume- baseline has been applied in the targets for the 2025, 2026 and 2027 financial years. based charges. For the 2024 financial year, NERSA only approved the 40 introduction of Homeflex, a residential time-of-use tariff, as well as a net The majority of savings for the past year were attributable to other billing offset rate for customers with small-scale embedded generation to income from new customer connections, containment of growth in 5.4 be compensated for energy supplied to the grid. No structural changes to primary energy costs from the negotiation of coal prices more favourable tariffs have been approved for the 2025 financial year. than our assumptions, together with other procurement savings. 2024 2025 2026 2027 Unfortunately, these savings were largely eroded by increased spend on In September 2024, we submitted a revised retail tariff plan to During the year, we received R76 billion in shareholder loans from Eskom-owned and IPP OCGTs. restructure tariffs and better address the cost reflectivity of the Government under the Eskom Debt Relief Act, 2023 as amended. By year generation, transmission and distribution components of electricity It should be noted that Deloitte has qualified this KPI, as they were not end, R44 billion of this had been approved for conversion to equity by the supply, for possible implementation from the 2026 financial year. NERSA able to substantiate the estimates and judgements applied in management’s Minister of Finance, based on our continued compliance with the strategic published the plan for stakeholder comment in November 2024, with a conditions attached to the support. The shares related to the conversion estimation of the baseline against which coal savings of approximately decision expected in January 2025 to allow for implementation of any were issued to the shareholder in April 2024. R1.3 billion have been reported. tariff changes from 1 April 2025. The remaining R32 billion in support, which was received during the  efer to the qualification contained in the independent sustainability IR R fourth quarter, was recognised as a liability in the financial statements at Did you know? assurance report on page 127 for further information year end as it would only be assessed for compliance with the conditions Eskom has always made ringfenced revenue applications for in the 2025 financial year. Subsequent to year end, the Minister of Finance Generation, Transmission and Distribution. It is, therefore, possible approved the conversion of this amount to equity on 29 July 2024, with Savings targets for the next three years are based on a revised the related shares issued in August 2024. for NERSA to make separate allowable revenue determinations for methodology using our 2023 results as a baseline, which caters for the each licensee under the prevailing MYPD methodology. decline in sales, worsening generation plant performance, change in production mix (specifically the contribution by OCGTs and IPPs) and growth in our cost base since the 2018 baseline. 65 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances continued Based on the amendment of the Act, Eskom is required to pay interest at a market rate on all future amounts advanced as a shareholder loan, Government’s debt relief support will greatly assist us in meeting debt effective from 8 April 2024, when the amendment was promulgated. Although, the interest charge will only be calculated from 15 July 2024, when servicing outflows up to March 2026, with the takeover of up to R70 billion the implementation agreement was concluded. Eskom and National Treasury also agreed to reduce the debt relief support by R2 billion for the 2024 in debt servicing (principal and interest) thereafter providing further financial year, from R78 billion to R76 billion, and a further R2 billion for the 2025 financial year, from R66 billion to R64 billion, to cater for assumptions support. However, there are sizeable redemption obligations after this, around the delayed disposal of Eskom Finance Company SOC Ltd. which will have to be serviced from improved operating cash flows and potential incremental borrowings. Our latest Corporate Plan indicates DEBT SERVICING that we will be able to service or refinance these maturities, although this SOLVENCY RATIOS relies on a more cost-reflective tariff path. Our Treasury Department has Target Target Target Target Actual Actual Actual developed a contingency plan, setting out potential financing scenarios Measure and unit 2027 2025 2024 met? 2024 2023 2022 should tariff path assumptions not be realised, with any additional financing to be subject to approval from the Minister of Finance. Group DRAWDOWN PROGRAMME FFO as % of gross debt, % 25.86 13.12 11.15 10.74 9.12 14.11 The conditions of the Eskom Debt Relief Act, 2023 as amended, specify FFO (after net interest) as % of gross debt, % 20.20 5.98 3.98 3.94 2.40 7.06 that no new borrowings will be allowed from 1 April 2023 until the end Cash interest cover, ratioSC 6.13 1.92 1.22 1.18 1.29 1.69 of the debt relief period, unless approved by the Minister of Finance. Debt service cover, ratioSC 2.74 0.76 0.44 0.46 0.58 0.76 Eskom may, however, continue to draw down on existing facilities in place Gross debt/EBITDA, ratio 4.37 7.05 9.08 11.58 13.92 8.54 at 31 March 2023. Debt/equity (including long-term provisions), ratio 0.75 1.39 1.62 1.99 1.88 1.81 On 31 March 2023, we had concluded R16 billion in private placement funding with the support of the Minister of Finance, although the funding The debt/equity ratio has worsened as a result of the decline in equity, Other than this, our solvency ratios have mostly improved when compared was only received in early April 2023. This funding was necessary to linked to the R55 billion net loss after tax recorded for the year. This is to the prior year, which is largely attributable to the improvement in EBITDA support liquidity during the first quarter of the financial year, while despite the positive impact of the R44 billion in Government support performance and reduction in debt. Although, operating cash flows remain awaiting receipt of the first tranche of the shareholder loan after converted to equity at year end. The major contributing factors to the inadequate to fund our debt servicing requirements on a standalone basis. enactment of the Eskom Debt Relief Act in July 2023. loss for the year remain financial sustainability challenges arising from the lack of cost-reflective tariffs, poor generating plant performance, above- Debt servicing outflows, including both capital repaid and interest paid, amounted to R89.8 billion for the year (2023: R72.2 billion). The R76 billion The only other funding secured during the year was through existing inflationary cost increases, non-payment by customers as well as high facilities from development financing institutions (DFIs). Total drawdowns debt servicing costs. Furthermore, the loss after tax was worsened by the in Government debt relief support was necessary to meet these obligations, although we did have to fund a portion of these requirements from DFIs amounted to R7.5 billion, against a target of R10.6 billion. derecognition of the deferred tax asset of R36.6 billion at 31 March 2024. We are targeting a DFI and export credit agency (ECA) drawdown from available funds. programme of R23.2 billion over the next five years, in addition to the  efer to note 14 in the financial statements for further information on the AFS R Our debt repayment profile remains pressured over both the short and long remaining shareholder loans due from Government. derecognition of the deferred tax asset term, with debt repayments and interest payments of around R210 billion and R120 billion respectively over the next five years, based on the existing DFI and ECA drawdown schedule R billion debt book (excluding future borrowings). Debt service outflows of R71 billion 2025 11.2 are expected in the 2025 financial year. 2026 2.8 Projected debt maturity profile (net of swaps and excluding future borrowings) at 31 March 2024, R billion 2027 6.7 2028 1.6 100 2029 0.9 80 Total 23.2 60 40 20 0 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045+ Capital Interest 66 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances continued DEBT SECURITIES AND BORROWINGS CREDIT RATINGS The main focus of our debt strategy going forward is to ensure continued LATEST CREDIT RATINGS adherence to the conditions attached to the debt relief support, to Standard & Fitch: local enable conversion of shareholder loans to equity. This is critical for Rating Poor’s Moody’s currency deleveraging our balance sheet and reducing our finance costs over time. Foreign currency B B2 n/a Our gross debt securities and borrowings balance has decreased to Local currency B B2 B R412.2 billion (2023: R423.9 billion), mainly due to debt servicing outflows Standalone CCC Caa1 CCC- and the restriction on new borrowings. Nevertheless, the weakening Outlook Positive Stable Stable of the Rand had an unfavourable impact on the balance of foreign- Last rating action Affirmed Upgrade Affirmed denominated borrowings. A reconciliation of the major movements in Last action date 22 November 2024 6 September 2023 28 May 2024 debt securities and borrowings is shown below. Movements in gross debt securities and borrowings R billion While our credit ratings remain at sub-investment grade level, we have experienced a significant improvement in ratings in recent past on the back of Government’s debt relief support. Balance at 31 March 2023 423.9 Debt raised from private placements concluded in March 2023 16.0 Moody’s upgrades Standard & Poor's Debt raised through DFI funding 7.5 Fitch affirms our our credit ratings Fitch places our affirms our credit Debt repaid (54.6) credit ratings and revises the credit ratings ratings and revises Net fair value and foreign exchange movements 12.8 with a stable outlook from under “criteria the outlook from Other1 6.6 outlook positive to stable observation” stable to positive Balance at 31 March 2024 412.2 1. Mainly comprises interest accruals. May June Sep Nov Jan May Nov Net debt, R billion 2024 2023 % change 2023 2023 2023 2023 2024 2024 2024 Debt securities and borrowings 412.2 423.9 3 Loan from shareholder1 32.0 – 100 Lease liabilities 7.4 8.1 9 Government Standard & Fitch affirms our Cash and cash equivalents2 (23.6) (7.5) 214 promulgates the Poor’s upgrades credit ratings Payments made in advance (0.6) (0.7) 6 Eskom Debt our credit with a stable Net derivatives held for risk management 2 (26.3) (25.0) 5 Relief Act, 2023 ratings with a outlook Net debt 401.1 398.8 <1 stable outlook 1. A total of R76 billion was received during the year, of which R44 billion was approved for conversion to equity by year end. The remaining R32 billion was subsequently approved for conversion in the 2025 financial year. On 28 May 2024, Fitch affirmed our previous credit ratings with a stable 2. In the table above, assets are reflected as negative amounts. On 18 January 2024, Fitch placed 19 global organisations outlook. The affirmation reflects the strong ties between Eskom’s credit including Eskom, under “criteria observation” due to the ratings and that of the sovereign, in line with the revised rating criteria for Based on financial modelling, our debt securities and borrowings is expected application of revised criteria for government-related entities. government-related entities. to reduce by around 40% over the next five years, to a more sustainable These introduce more granular rating outcomes and place level of approximately R250 billion, due to the debt relief support from greater emphasis on the standalone credit profile of each entity. Investors remain concerned about Eskom’s poor operating performance, Government. This is dependent on continued compliance with the conditions “Criteria observation” means that an entity’s existing rating weak financial position and dependence on Government support. attached to the Eskom Debt Relief Act, 2023 as amended, including may change due to the revised criteria, but does not necessarily Implementation of our turnaround plan to improve plant performance restrictions on new borrowings, together with an appropriate tariff path. indicate a change in the underlying credit profile. Fitch indicated as well as address the lack of cost-reflective tariffs, non-payment by that all ratings placed on “criteria observation” would be municipalities and the high debt burden, remains critical for improving our reviewed within six months. credit ratings. 67 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances continued MANAGING ARREAR MUNICIPAL DEBT Key debt management indicators at 31 March 2024 The top 10 defaulting municipalities (including metros) owed Target Target Target Target Actual Actual Actual arrear debt of R44.4 billion at year end, which constituted 60% Measure and unit 2027 2025 2024 met? 2024 2023 2022 of total arrear municipal debt. Arrear debt as % of revenue, % 7.11 5.11 5.17 3.95 4.80 3.91 Municipality, R million 2024 2023 % change Average debtors days (including municipalities, Soweto and international n/a 111.31 98.38 100.03 95.19 88.44 1. Emalahleni Local Municipality, customers), days1 8 510 7 418 15 Mpumalanga Debtors days – municipalities, average debtors days1 n/a 225.17 194.65 212.64 179.27 149.63 Debtors days – large power top customers excluding disputes, average debtors days1 n/a 16.43 16.06 15.47 14.48 14.63 2. Maluti-a-Phofung Local 7 976 7 239 10 Other large power user debtors days (<100GWh p.a.), average debtors days1 n/a 16.01 16.54 16.48 16.28 17.54 Municipality, Free State Debtors days – small power users excluding Soweto, average debtors days1 n/a 47.30 46.47 45.19 46.19 47.70 3. Emfuleni Local Municipality, 7 065 5 913 19 Gauteng Payment levels, % SC, 2 93.00 94.00 94.90 94.91 95.03 95.97 4. Matjhabeng Local Municipality, 1. Debtors days are based on amounts processed on our billing system, and are shown before considering adjustments relating to non-collectability. Therefore, the amounts may not 5 761 5 250 10 Free State agree with those disclosed in the financial statements. No targets have been approved for the 2027 financial year and are therefore shown as not applicable. 2. Based on a new definition of the shareholder compact target which includes Soweto interest. The comparatives for 2023 and 2022 exclude Soweto interest. 5. Govan Mbeki Local 4 479 3 723 20 Municipality, Mpumalanga AFS For details of debtors by category, including impairment and carrying values, referInvoiced to notesmunicipal 5.1.1 and debt 20 in (including interest) the financial and percentage of statements 6. City of Tshwane Metropolitan total debt in arrears at 31 March 2024, R billion 3 117 1 060 194 Municipality, Gauteng 7. Lekwa Local Municipality, Non-payment of accounts is a systemic challenge to the entire electricity Invoiced municipal debt (including interest) and percentage of total debt 2 190 1 860 18 Mpumalanga industry. We have pursued a multi-pronged strategy aimed at recovering in arrears at 31 March 2024, R billion 8. Ngwathe Local Municipality, the outstanding arrear debt owed to us. This includes negotiating 24% 2 009 1 713 17 Free State payment arrangements with defaulting municipalities, pursuing our legal 76 85% rights through the courts, assisting struggling municipalities through active 9. City of Matlosana Local 1 750 1 438 22 partnering agreements; and working with various intergovernmental Municipality, North West platforms to resolve the culture of non-payment by municipalities. We 84% 10. City of Ekurhuleni aim to address arrear debt on three levels. 81% Metropolitan Municipality, 1 580 330 379 Gauteng 80% 74.4 Current account management 76% 58.5 44.8 Stop defaulting and enforce payment of current amounts 35.3 28.0 The arrear debt owing from City of Tshwane (CoT) and City of Arrear debt management Johannesburg (CoJ) metros in Gauteng has continued to escalate after 9.0 8.8 10.7 11.1 12.8 year end. We are engaging with these metros and pursuing our legal Reduce and/or eliminate overdue debt 2020 2021 2022 2023 2024 rights through the courts. Cumulative amounts Arrear municipal debt (including interest) CoT and Eskom concluded a five-year payment arrangement plan in Future debt management December 2024, subject to CoT settling its current accounts on time, CAGR Prevent future defaulting through pre-emptive action failing which the arrear debt owed will become payable immediately. The number of municipalities with an arrear debt balance of more than The High Court ordered CoJ to settle its outstanding debt, although CoJ Regrettably, the problem has continued to escalate over the years, with R100 million has increased to 69 at 31 March 2024 (2023: 61). Around is appealing the matter and has disputed the amounts billed by Eskom. arrear municipal debt amounting to R74.4 billion at year end (2023: 76% of the arrear municipal debt is owed by municipalities in the Free In November 2024, Eskom served a notice of intent to interrupt power R58.5 billion). Resolving the historic arrear debt challenge, collecting the State (29%), Mpumalanga (27%) and Gauteng (20%). Of recent concern supply to CoJ. Following an engagement between CoJ, Eskom and the revenue owed to us and preventing future growth in overdue amounts is the growth in arrear debt from metros, particularly in Gauteng. Year- Minister of Electricity and Energy, the notice was withdrawn, subject to are critical to improving operating cash flows and, ultimately, our on-year the capital balance outstanding from metros has increased by CoJ settling its current accounts and to allow an independent evaluation financial sustainability. 156% and from non-metro municipalities by 25%. of the disputed billing to be concluded. 68 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our finances continued MUNICIPAL DEBT RELIEF PROGRAMME National Treasury implemented its municipal debt relief programme from Based on the conditions, the following steps are taken if a municipality participating in the debt relief programme fails to settle its current 1 June 2023, through which any municipality with arrear debt outstanding account on time: at 31 March 2023 may apply for relief, subject to certain conditions. • A breach notification is issued to the defaulting municipality, and National and Provincial Treasury are informed of the breach in writing. The The conditions aim to restore a minimum set of financial management municipality is given 40 days to remedy the breach best practices in municipalities, including enforcing the settlement of • During the 40-day period, National and Provincial Treasury will take remedial action to ensure the municipality’s continued participation in current accounts. the debt relief programme • If the municipality fails to rectify the breach, National Treasury will inform Eskom of the municipality’s removal from the debt relief programme National Treasury circular 124, dealing with the municipal debt relief If a municipality is removed from the programme, we will be allowed to resume our credit control and debt management policies, as well as programme, can be accessed online at resume any legal proceedings that had been stayed under the conditions of the municipal debt relief programme. The municipality will no longer https://mfma.treasury.gov.za/Circulars/Pages/default.aspx receive relief and will once again become liable for its remaining arrear debt, including interest and penalties. We will also approach National Treasury for support in pursuing licence revocations for affected municipalities. After a municipality has demonstrated compliance with the conditions for 12 consecutive months, National Treasury will request Eskom to write off one-third of the municipality’s arrear debt balance outstanding at The municipal debt relief programme has delivered disappointing results. At municipalities for the duration of the programme. We have requested 31 March 2023. If fully complied with, the programme aims to write off year end, only 23 out of the 71 municipalities had complied with the condition National Treasury to engage with non-compliant municipalities to correct to settle their current accounts as they fall due. Regrettably, 46 municipalities their behaviour or to remove them from the programme so that we may the municipal arrear debt over a period of three years. had failed to settle their current accounts on time, of which one municipality resume legal proceedings and debt recovery processes. subsequently settled its account in April 2024. Two municipalities were new to the programme and could not be assessed for compliance at 31 March 2024 as National Treasury has written to affected municipalities to inform We have ring-fenced the amounts identified for potential their first payments on the programme were only due after year end. them that their participation in the municipal debt relief programme write-off based on the arrear debt outstanding at will be terminated should they fail to rectify the breach, although no 31 March 2023. These write-offs will not affect our future By November 2024, the level of compliance has deteriorated even further, municipalities have been removed from the programme to date. profitability as the arrear amounts have been fully provided with 61 out of the 71 municipalities failing to comply with the condition to settle their current accounts. These municipalities represent over 90% of the A workstream has been established under NECOM, with the aim of for; they were either not recognised as revenue or a receivable resolving distribution challenges contributing to the energy crisis. A arrear debt balance outstanding at 31 March 2023. to begin with, due to the accounting criteria for collectability key focus of the workstream is to develop a sustainable distribution not being met, or they have been subsequently impaired. No Our top three largest defaulting municipalities – Emalahleni, Maluti-a-Phofung industry by addressing legacy challenges, including the culture of non- write-offs were processed during the 2024 financial year as the and Emfuleni – received approval to participate in the municipal debt relief payment, through influencing short, medium and long-term solutions for municipalities must comply with conditions for 12 consecutive programme, yet all three remain overdue on their current accounts. municipalities and Eskom within the changing electricity landscape. months for the first third to be written off. In July 2023, the High Court ruled that Emfuleni must appoint Eskom to FUTURE FOCUS AREAS perform all functions and services relating to its electricity business. An • Participating in the public consultation process of our MYPD 6 revenue agreement was expected to be concluded in the first quarter of the 2025 application and pursuing the migration to a cost-reflective tariff path While implementation of the municipal debt relief programme means financial year, although the parties were unable to reach consensus. In • Exploring a longer tariff horizon for future revenue applications to we will not be able to recover the historic arrear debt owed to us, the September 2024, we obtained a court order to attach Emfuleni’s bank enhance tariff certainty for the industry objective of the programme is to resolve the poor payment levels and accounts as they had repeatedly failed to comply with the conditions of • Proposing the restructuring of tariffs through a revised retail tariff improve the settlement of current accounts by municipalities over time, the municipal debt relief programme. Emfuleni has since entered into a plan, to recover the fixed and variable component costs of generation, thereby leading to improved operating cash flows going forward. distribution agency agreement to release the attached bank accounts. transmission and distribution We were able to conclude a similar agreement with Maluti-a-Phofung • Implementing initiatives to achieve cumulative turnaround savings in May 2024, through which we will collaborate with the municipality to of R15.6 billion over the next three years and return Eskom to Performance against the municipal debt relief programme at assist in maintaining and operating its network, train and upskill municipal profitability in the short to medium term 31 March 2024 staff and takeover billing and revenue collection services. • Enforcing strict adherence to the conditions attached to the Eskom 71 municipalities approved to Representing R55.6 billion (95%) Debt Relief Act, 2023 as amended, to ensure the conversion of participate in the programme of the arrear debt balance Active partnering agreements are also in place with Phumelela, Msunduzi, shareholder loans to equity and deleverage our balance sheet, thereby,  outstanding at 31 March 2023 Raymond Mhlaba and Bela-Bela municipalities. However, most of these reducing finance costs over time 23 municipalities complying Compliant municipalities account agreements relate to the provision of technical services, including • Supporting the municipal debt relief programme and the settlement of for only R6.9 billion (12%) of the maintenance of infrastructure, with limited impact on revenue collection. current accounts by defaulting municipalities to improve payment levels 46 municipalities not arrear debt balance outstanding • Implementing active partnering agreements with municipalities to complying  The Board remains concerned about the low level of compliance by improve service delivery at 31 March 2023 Two municipalities newly municipalities, given that the conditions of the municipal debt relief • Working with NECOM and other Government structures to address participating programme prohibit Eskom from pursuing action against non-compliant sustainability challenges in the electricity distribution industry 69 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure When demand outstrips supply and the shortfall cannot be EAF continued to deteriorate to Loadshedding on Spend on Eskom and IPP OCGTs supplemented by peaking capacity from pumped storage stations increased to or OCGTs, we implement loadshedding and load curtailment of key 54.56%, 329 days customers to maintain the balance. Furthermore, to protect the power with average plant unavailability for the partly due to three Kusile units being R33.9 billion system, we need to ensure that we have sufficient emergency reserves at pumped storage and OCGT stations to respond to significant unplanned year over 15 500MW unavailable for six to eight months to mitigate loadshedding breakdowns or disruptions to supply. 2024 2024 329 2024 33.9 54.56 Target 65.00 Target 261 Target 27.7 This situation is expected to continue until additional dispatchable 2023 280 2023 29.6 capacity of 4 000MW–6 000MW is added to the grid, to ease supply 2023 56.03 2022 65 2022 14.7 constraints and stabilise the grid, creating much-needed space for 2022 62.02 maintenance and reducing the need for loadshedding. We regularly test the various defence systems to ensure that we can respond effectively to a major event, such as a regional or national Kusile Unit 5 System minutes lost at SAIDI of blackout. synchronised 3.29 34.9 hours SYSTEM PERFORMANCE recovered to within expected levels showed slight improvement, remaining Over the past year, we have seen sales volumes contract further, both to the grid on 31 December 2023, delayed well within target 2024 3.29 due to the impact of loadshedding, but also due to customers installing by a year due to a fire in September 2022 2024 behind-the-meter embedded generation, mostly in the form of solar PV. Target 3.53 34.9 2023 4.71 Target 38.0 Due to inadequate supply capacity being available, we were forced to 2022 2.88 2023 35.5 implement loadshedding on 329 days during the year (2023: 280 days) 2022 at higher levels than the previous year, with energy not supplied during 35.5 loadshedding estimated at 13.2TWh (2023: 13.5TWh). Put another way, we implemented loadshedding for a total of 6 367 hours, which translates to an effective 265.3 days of continuous loadshedding during the year (2023: 5 557 hours equivalent to 231.6 days). In accordance with our mandate, we aim to effectively operate our ROLE OF THE SYSTEM OPERATOR infrastructure, which constitutes our manufactured capital, to provide To maintain the integrity of the power system, our world-class System Loadshedding and load curtailment over the past five years, GWh and days the country with a reliable supply of electricity. Our plant consists Operator has to balance electricity supply and demand in real time by of our generation fleet and transmission and distribution networks, maintaining the frequency of the power system at around 50Hz, within a 329 supplemented by capacity supplied by IPPs and cross-border imports. dead band of 49.85Hz to 50.15Hz. This is achieved by managing available 280 We’re also finalising the construction of new power stations and high- dispatchable generation capacity while compensating for variations in voltage transmission lines under our new build programme. energy supplied by renewable generation, which is non-dispatchable. MANAGING SUPPLY AND DEMAND Did you know? It remains a challenge to manage non-dispatchable capacity such as 13 476 13 215 wind and solar energy when the sun is not shining or the wind is not Electricity supplied by Eskom + IPPs + imports  blowing as it can lead to huge shifts in available capacity from day to day. The biggest shift in wind availability from one evening peak to 65 Transported by transmission and distribution the next has been around 2 000MW. This situation is especially true 46 47 during winter when the passage of a cold front across the country sees networks an increase in demand in Gauteng at the same time as wind generation 1 291 1 034 1 605  drops off in the south. If this is combined with cloudy conditions in 2020 2021 2022 2023 2024 To local and international customers, with some Gauteng, which affects production from behind-the-meter solar PV, it acts as a “triple whammy” to the system, which is a challenge for the GWh curtailed (estimate) Days energy losses System Operator to manage. 70 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued Even though loadshedding was implemented on more days than in the Over 4 000MW of Eskom’s capacity was offline for an extended As can be seen from the above, loadshedding was generally more severe previous financial year, overall, the estimated energy not supplied due to period, adding to the constrained system and resulting in elevated during the first half of the year. The system performance improved load reduction remained at a similar level. levels of loadshedding being required to balance supply and demand of during the second half of the year, assisted by the return to service of the grid. This was due to incidents such as the flue gas duct failure in three units at Kusile. However, the return to service of Koeberg Unit 1 Did you know? October 2022 taking Kusile Units 1, 2 and 3 out of service; the generator in November 2023 was followed immediately by Unit 2 being taken We lost an estimated 13.9TWh of energy through theft during explosion at Medupi Unit 4 in August 2021 making the unit unavailable; out of service for an extended planned outage, therefore, providing no the past year (2023: 13.4TWh), which exceeds the estimated load the planned life extension outages on both Koeberg units; and the Kusile immediate net benefit to the system. Although adding to the system curtailed during the year and is equivalent to the output of around Unit 5 air heater fire in September 2022 delaying synchronisation and constraints in the short term, these extended outages at Koeberg will three large coal-fired units. The impact of illegal connections and commissioning of the unit by about a year. enable the station to operate reliably for an additional 20 years, subject other forms of energy theft on both financial performance and to the National Nuclear Regulator (NNR) extending the licence, thereby Other than the poor Eskom generation plant performance due to high benefitting the system in the long term. network operations should not be underestimated. levels of unavailability (accounting for a shortfall of about 1.7TWh for the year), there are several other reasons for energy supplied not meeting Renewable IPP generation continued to support the power system Over the winter period (from May to August 2023), average generation expectations: throughout the year, producing 17.9TWh (2023:16.9TWh), with wind unplanned unavailability was 16 513MW, higher than the Winter • Delays in renewable IPP programmes that have not yet delivered generation supporting the evening peaks and solar PV contributing most Outlook’s base-case assumption of 15 000MW. Actual unplanned capacity in line with Government’s outlook in the IRP 2019 (shortfall of support during the daytime. unavailability exceeded the maximum assumption of 18 000MW under about 1.4TWh) the Winter Outlook about 13% of the time. Over the summer period The synchronisation of Kusile Unit 5 further assisted the grid, particularly • Delays in short-term and risk mitigation IPP programmes – which are (from September 2023 to March 2024), average unplanned unavailability over evening peaks, even though the unit is only operating at full power required to augment our inadequate capacity – that have not come was 14 910MW, higher than the Summer Outlook’s base-case assumption around-the-clock since reaching commercial operation on 30 June 2024. online as quickly we had expected (shortfall of about 7.4TWh) of 14 500MW. Actual unplanned unavailability exceeded the maximum Kusile Unit 6 is planned to be synchronised to the grid by February 2025, • Lower-than-budgeted power imports (shortfall of about 1.6TWh) with the expected return to service of Medupi Unit 4 using a second- assumption of 17 500MW under the Summer Outlook more than 2% of the time. hand stator by March 2025. These units will further assist in supporting We made extensive use of both Eskom and IPP-owned OCGTs to meet the constrained power system. demand during periods of poor base-load generation availability. A total O  perational, system performance and environmental data can be of 5.1TWh was supplied by Eskom-owned and IPP OCGTs during the The last time we implemented loadshedding was on 26 March 2024. accessed on our Data Portal at www.eskom.co.za/dataportal year (2023: 4.1TWh) at a cost of R33.9 billion (2023: R29.6 billion) at Since then, the system has performed much better in general, with no load factors of around 17%. This was in line with our half-year forecast of loadshedding being required since then. R32.2 billion. Although this situation is not sustainable in the long term, Loadshedding during the financial year, days we utilise OCGTs to the extent possible within our financial constraints, given the much higher cost of loadshedding to the country. Stage 1 4 Energy curtailed per month, GWh Stage 2 62 Stage 3 122 Stage 4 66 2 042 1 971 Stage 5 20 1 508 1 484 Stage 6 55 1 218 1 152 1 004 712 691 560 557 316 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Oct-23 Nov-23 Dec-23 Jan-24 Feb-24 Mar-24 71 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued USE OF OPEN-CYCLE GAS TURBINES TECHNICAL PERFORMANCE Supply constraints continue to have an adverse impact on financial performance due to the increased reliance on expensive OCGT production to avoid We use several indicators to assess the performance of our generation or minimise loadshedding. OCGT production, while critical for alleviating supply constraints and reducing the impact of loadshedding, is significantly more fleet. EAF or energy availability factor looks at overall plant availability to expensive than other generation sources. produce energy. PCLF or planned capability loss factor is an indication of the level of planned maintenance, while UCLF or unplanned capability Target Target Target Target Actual Actual Actual loss factor refers to unplanned losses, whether through full breakdowns Measure and unit 20271 2025 2024 met? 2024 2023 2022 or partial unavailability of plant. OCLF or other capability loss factor Eskom OCGT production, GWh 3 798 1 899 2 539 3 634 3 018 1 826 considers those losses outside a station’s control, which, together with Eskom OCGT cost, R million2 32 396 15 618 19 609 23 873 21 355 10 033 UCLF, makes up the unplanned unavailability of the fleet. Plant availability (EAF) at 54.56% remains lower than the previous year IPP OCGT production, GWh 1 584 792 1 056 1 509 1 098 899 (2023: 56.03%) and significantly worse than the shareholder compact IPP OCGT cost, R million 6 335 4 463 8 094 10 054 8 287 4 649 target of 65%. The decrease in EAF compared to the previous year is largely due to an increase in unplanned losses (UCLF) to 32.34% (2023: 1. The 2027 target is the cumulative target over the next three years 31.92%), offset by a slight decrease in other load losses (OCLF) to 1.06% 2. The OCGT cost includes diesel storage and demurrage costs of R95 million (2023: R104 million; 2022: R108 million) incurred when not utilising the OCGTs. (2023: 1.66%). Despite the high levels of UCLF, planned maintenance increased to 12.04% (2023: 10.39%), due to an increased focus on the Favourable diesel price movements during the year enabled higher GENERATION PERFORMANCE Generation Recovery Plan in an effort to improve the performance of production from OCGTs than originally anticipated. An additional To meet the country’s electricity demand and provide electricity at the fleet over the longer term. Due to the success of addressing the new R5 billion was also approved for diesel purchases to compensate for the a reasonable price, we continue to operate 30 base-load, mid-merit, build design defects, the five Medupi units in operation recorded an EAF poor performance by coal-fired stations as well as lower production by peaking and renewable power stations, with a total nominal capacity of of about 75% for the year. IPPs. The funds were reallocated from other areas that were underspent, 46 788MW. The median age of our coal-fired stations exceeds 40 years. including the Risk Mitigation IPP Programme (RMIPPPP). Coal-fired stations recorded an average energy utilisation factor (EUF) Included in the capacity are four small hydroelectric stations as well as of 96.51% for the year (2023: 95.59%), with EUF over 90% at all 14 For the coming year, we have catered for a load factor of 9% on both the 100MW Sere Wind Farm, which are not considered for capacity coal-fired stations. This is substantially above the expected average EUF Eskom and IPP-owned OCGTs, reducing to 6% in the 2026 financial year management purposes. performance of around 75% over the long term considering the age of and 3% in the 2027 financial year, as EAF improves and more renewable the fleet, which has negative technical implications as reflected in the and short-term IPP capacity comes online.  etailed information on the installed and nominal capacity of our power IR D increasing plant breakdowns (UCLF) that result in declining EAF. stations, as well as IPP capacity, is set out on pages 118 to 119 As mentioned before, the high EUF can be alleviated by adding additional capacity to the grid and improving Generation plant reliability – when more capacity is available, the plant doesn’t have to work as hard to Target Target Target Target Actual Actual Actual achieve the same result. We are striving to reach average EAF of 65% for Measure and unit 2027 2025 2024 met? 2024 2023 2022 the 2025 financial year and 70% for the 2026 financial year, in conjunction Energy availability factor (EAF), % SC 70.00 65.00 65.00 54.56 56.03 62.02 with reducing EUF within international norms. Planned capability loss factor (PCLF), % 10.50 10.50 10.50 12.04 10.39 10.23 Kusile Unit 4 achieved commercial operation on 31 May 2022 and Unplanned capability loss factor (UCLF), % 18.00 23.00 23.00 32.34 31.92 25.35 became official for measurement purposes one year later, from Other capability loss factor (OCLF), % 1.50 1.50 1.50 1.06 1.66 2.40 1 June 2023. It achieved EAF of 58.09% during the past year. Optimisation Partial load losses, average MW1 n/a n/a n/a n/a 6 615 6 057 4 851 of the wet flue gas desulphurisation (FGD) plant to support the unit Post-philosophy outage UCLF, % SC, 1 n/a n/a 14.00 31.61 35.75 29.74 was completed in February 2023. The unit will operate at full capacity Unplanned automatic grid separations (UAGS trips), number1 n/a n/a n/a n/a 593 736 697 once a permanent solution is effectively implemented. Partial load losses averaged at about 120MW during the year (about 15% of the capacity 1. Future targets shown as n/a are dependent on system performance. of the unit). 72 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued PLANNED MAINTENANCE UNPLANNED LOSSES Major incidents Planned maintenance has improved year-on-year and achieved the target. UCLF has deteriorated significantly compared to the previous year, with A flue gas duct failure was experienced at Kusile Unit 1 in October 2022, both partial and full load losses increasing. Some of the main contributors also affecting Units 2 and 3. The incident resulted in around 2 100MW Fifty-four outages were scheduled for the year. When scheduling outages, to unplanned losses are major incidents, outage slips, boiler tube failures being unavailable, significantly worsening the system performance. The consideration is given to system capacity constraints, plant risks and the and unit trips. The Generation Recovery Plan is being driven with Kusile flue gas duct failure accounted for 2.61% UCLF for the year. availability of spares and resources. By the end of the year, 32 outages increased focus, and progress continues. were completed, 10 were in execution, nine were deferred to the coming The temporary stacks were completed with the FGD bypassed. financial year and three were cancelled as the work was completed Contribution to UCLF, % This allows us to operate the units in line with the approved national under a different outage. Furthermore, we completed an additional 36 environmental exemptions and conditions. Regrettably, there have been short-term outages – this refers to corrective maintenance to avoid an 1.61 some non-compliances on particulate emissions from the stack. For the increased risk of availability loss and does not depend on the duration of 2.84 first few weeks, the filtration process was not yet fully effective and, the outage. therefore, resulted in high dust emissions. Nevertheless, to date, no non-compliance with the SO2 stack limits or SO2 ambient standards has We use several measures to track outage performance, such as outage 3.45 occurred while operating the temporary stacks. Until the permanent readiness, due date performance and post-outage UCLF. Outage 14.21 stack is completed, the necessary steps will be implemented to mitigate readiness is tracked three months before the planned execution of an 32.34% the impact of SO2 emissions on air quality. outage and is reliant on timeous and adequate release of funds. All three of the units were returned to service by November 2023. The outage readiness indicator at T-3 (three months prior to outage) was The return of the units has contributed to easing grid constraints and had assessed at 69.89% for the year (2023: 70.25%), against a target of 80%. a positive impact on reducing levels of loadshedding. The permanent repair 10.23 Several factors contributed to the poor outage performance; action plans of the damaged stack is expected to be completed by March 2025. are in place to address the shortcomings. These factors include: Partial load losses Full load losses • Spares and schedule management The system continues to be impacted by the Medupi Unit 4 generator Outage slips Boller tube leaks explosion in August 2021, resulting in 720MW not being available to the • Outage integration and funding Unit trips grid. The unit was removed from the nominal asset base in October 2023 • Training and competencies and will not contribute to UCLF until its return by March 2025. A second- • Staff complement Partial load losses hand stator has been procured and delivered and is being installed. • Investigation of outage slips Despite the Generation Recovery Plan, average partial load losses of Planned completion of manufacturing of the new stator and delivery to 6 615MW have increased significantly compared to the previous year site is the end of November 2025. The new stator is then planned for Did you know? (2023: 6 057MW) and remain significantly worse than target. Partial load installation during a planned general overhaul six years after the return to The late release of funds has a ripple effect on the T-3 performance losses contributed 14.21% UCLF for the year (2023: 13.12%), almost 44% service of the unit. as it affects the ordering of spares and other long-lead materials, of total UCLF. Tutuka Unit 6 was due to return to service in November 2023 from an issuing of task orders and finalising the integrated schedule. Outage Our recovery plans did not achieve the planned reduction in partial extended interim repair outage. Multiple attempts to light up the unit performance and recovery plans have been hampered in recent load losses. For the 12 outages during the year aimed at reducing partial led to fuel oil deposits which ignited, resulting in a fire. A recovery plan years by the late release of funds caused by our constrained liquidity load losses completed, none of the units have realised the full targeted by the original equipment manufacturer (OEM) includes two phases. position. However, the situation improved somewhat in the current reduction, despite some improvement being recorded. To optimise outage The first entailed the safe-making and removal of debris and was financial year, with the full funds having been released in July 2023. execution to reach the targeted reduction in partial load losses, we will be completed in February 2024. The approval of contracts for the next For the 2025 financial year, R11.69 billion has been made available for implementing several interventions to address the root causes identified: phase is in progress. The unit was placed into extended inoperability on outages, all of which has been released. This was made possible by 1 August 2024 and is expected to return to service in the 2026 financial • Disciplined schedule management during planned outages the certainty provided by the support from Government under the year. The incident accounted for 0.91% UCLF for the year. debt relief programme. • Improved outage integration • More training to improve competencies Outage slips • Increase d staff complement Due date performance is calculated for units that were on outage Post-outage UCLF is a key measure to track outage effectiveness on for more than 21 days and for reliability outages longer than 14 days. units that undergo general overhauls, mini overhauls and interim repairs, Kendal, Majuba, Matimba, Duvha and Arnot contributed 59% of total For the year under review, only 36.11% of outages met their due date and is measured up to 60 days after a unit synchronises to the grid after partial load losses for the year. Focused interventions at Kendal and (2023: 33.33%), significantly below the target of 80%. Once an outage maintenance. Post-outage UCLF of 31.61% also performed worse than the Majuba are expected to reduce partial load losses by approximately 20% slips against the due date, it is then measured as UCLF. Outage slips target of 14% (2023: 35.75%), although improving slightly year-on-year. in the short term. contributed 3.45% to UCLF for the year (2023: 3.18%). 73 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued Boiler tube failures Koeberg Unit 2 was taken out of service on 11 December 2023 to We are driving completion of the commitments that were stipulated in The boiler tube failure rate (failure per unit per year using a 12-month undergo a similar long refuelling and maintenance outage to replace its the safety case submitted to the NNR to support long-term operation. moving average) increased to 2.37 for commercial units (2023: 2.17), with three steam generators. The unit is expected to return to service by early Due to the limited time left to conclude the activities, we conduct boiler tube failures contributing 2.97% to UCLF (2023: 2.56%). The boiler January 2025. detailed monitoring of these commitments to ensure that any emerging tube failure rate has shown an upward trend over the past five years, risks to timeous completion are identified early, to enable mitigating largely attributed to outage deferrals and deferred midlife-refurbishments Koeberg long-term operation project actions to be taken. because of constrained capital funding during that time. Over the past The long-term operation (LTO) activities, which include the replacement year, earlier outage deferrals are estimated to have contributed 0.55 to of the steam generators, continue according to schedule. This will enable The NNR completed a series of public engagement sessions in February the overall boiler tube failure rate. Nevertheless, three stations recorded Koeberg to operate for another 20 years beyond 2024. This is aligned with and June 2024. The NNR will address the public feedback from these outstanding performance at the end of March 2024 based on a failure the IRP 2019 requirement for continued energy security beyond 2024. sessions. The NNR is also reviewing our safety case and associated rate of less than 1, namely Kendal, Matimba and Medupi. analyses in support of long-term operation, together with a consolidated readiness report, which we submitted in October 2023. If approved, A number of initiatives are being pursued to improve boiler tube failure Did you know? this would allow Unit 1 to operate until July 2044 and Unit 2 until performance: Extending Koeberg’s operating life is an investment into sustainable November 2045. and low-carbon electricity generation infrastructure, as nuclear • Addressing the deferred boiler tube scope produces no greenhouse gas emissions during operation. Over On 15 July 2024, the NNR announced its decision to grant Eskom a • Ensuring units do not operate outside design limits to minimise thermal its lifecycle, nuclear produces about the same amount of carbon licence to continue operating Koeberg Unit 1 for another 20 years. excursions dioxide-equivalent emissions per unit of electricity as wind, and As we are now authorised to continue operating Unit 1 beyond • Reducing unit trips and cyclic stresses one-third of the emissions per unit of electricity when compared the current licence end date, it will continue to operate safely until • Improving milling plant availability and performance to better manage to solar. January 2025 when the unit will be shut down for its next scheduled combustion conditions and operating temperatures refuelling outage. As the current licence for Unit 2 only expires on • Improving the availability of spares 9 November 2025, and Koeberg is still implementing some of the The NNR has responded positively to our request and has separated prerequisites for long-term operation in the current outage, the NNR Unit trips the licence expiration dates aligned to each unit’s design life of 40-years. has deferred the decision for long-term operation on Unit 2 until The coal fleet recorded 571 trips during the year (2023: 712 trips), which Therefore, the Unit 1 licence expiry date remained as 21 July 2024, while later. Once the current outage is complete, Unit 2 will be returned to contributed 1.61% to UCLF for the year (2023: 3.13%), significantly lower the Unit 2 licence expiry date has been extended to 9 November 2025. service, and the NNR will announce their decision later, but prior to than the previous year. 9 November 2025. Other losses Poor coal quality accounted for 0.75% OCLF for the year (2023: 0.73%), with most losses being experienced at Matla. KOEBERG PERFORMANCE Koeberg Nuclear Power Station continues to operate within the required safety parameters, at the lowest marginal primary energy cost of our base-load stations. Koeberg Unit 1 was shut down on 10 December 2022 for outage 126, a planned long-duration outage which included the replacement of the three steam generators. The outage was significantly delayed due to resourcing challenges and unexpected technical challenges experienced as part of the steam generator replacement project. The unit was synchronised to the grid in November 2023 and underwent commissioning testing at various power levels with the unit connected to the grid. Since December 2023, the unit operated at full load until being shut down on 11 September 2024 due to an isolation valve failure. The unit was safely returned to service on 20 September 2024. 74 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued As part of the licence requirements, we are working with the NNR  Implementation complete to finalise the details of a ring-fenced nuclear decommissioning fund  Implementation in progress to ensure that sufficient financial resources will be available to fund 70% Koeberg’s decommissioning costs. 65% EAF2 EAF1 Nuclear safety 3 Nuclear safety is assured through a defence-in-depth approach across the 2 WORLD CLASS PERFORMANCE value chain of nuclear operations within Eskom. The nuclear objectives, Actions for FY2025 onwards policies and procedures drive nuclear safety and security as an overriding EXECUTIVE EXCELLENCE 1 Actions for FY2024  Return of Medupi 4 from long-term priority in every aspect of nuclear operations to ensure the protection forced outage SET UP FOR SUCCESS  Successful execution of Koeberg 1 of people and the environment. Nuclear safety is continuously validated  Commercial operation of Kusile 5  Set-up the enabling structures  Sustain excellent Medupi performance through layered oversight and safety monitoring by Eskom executives, as  Synchronisation of Kusile 6 – Turnaround plans  Embed principles of operational well as internal and external oversight bodies. This provides Eskom with a  Continuous focus on current and – Generation recovery office excellence comprehensive, industry-benchmarked view of nuclear safety. future skills – Key enablers  Address internal skills gaps Benchmarking  Guard performance at current flagship  Prevent outage slips  Ensure successful implementation of Eskom remains a member of the World Association of Nuclear stations  Return of Kusile 1, 2 and 3 Koeberg 2 steam generator and long- Operators (Wano). South Africa remains a member of the International – Medupi, Lethabo, Matimba and Peaking  Synchronisation of Kusile 5 term operating projects Atomic Energy Agency (IAEA). These affiliations facilitate the definition  Focus on the priority stations  Review plant shutdown dates based on of standards, sharing best practices, conducting periodic safety reviews, – Tutuka, Duvha, Majuba, Matla, Kendal, system requirements training personnel and benchmarking performance. Arnot, Kriel The most recent routine Wano peer review of Koeberg was carried – Kusile removed from priority list Board  Execution of Koeberg 1 outage approve out in April 2023, the outcome of which was favourable. Based on that review, Koeberg’s performance is showing an upward trajectory  Source external specialised skills d with strong performance against the benchmarked core values. The continuous engagement with Wano and other benchmarking bodies Continuous execution of culture transformation and strategic levers under the Generation Recovery Plan is essential to verify performance standards, maintain alignment with Notes industry best practice, and maximise the support available. 1. 65% during the month of March 2024 2. 70% during the month of March 2025 GENERATION RECOVERY PLAN The Generation Recovery Plan was refocused towards the end of the 2023 financial year with a stronger focus on EAF recovery. It will deliver For the past year, the focus remained on the top six stations, namely, Kusile Unit 5 has achieved commercial operation. To further improve initiatives to improve EAF and recover load losses through an intensive Duvha, Kendal, Kusile, Majuba, Matla and Tutuka, with Arnot and available capacity, Generation will recover units on long-term outages, reliability maintenance programme. Achievement of improved technical Kriel together accounting for eight priority stations. Given sustained such as Koeberg Unit 2 which is on planned outage and Medupi Unit 4 performance will also result in improved environmental performance. improvement at Matla, it will be removed from the list of priority which is in extended inoperability, while ensuring the first synchronisation The immediate focus is to reduce the intensity and frequency of stations, and Matimba will now be included as a focus station. Increased of Kusile Unit 6. This should add about 2 500MW to the grid by the end loadshedding. output at the priority stations will be achieved through a combination of of the coming year. improving outage and maintenance performance together with focusing The Board has approved the Generation Recovery Plan which focuses on operational excellence. This should dramatically reduce the intensity ENERGY SUPPLIED BY IPPS on improving EAF to 70% and above over the next five years. This will be of loadshedding in the short-term, while wider industry reforms outlined We procure energy from IPPs under several government-led programmes. achieved by continued focus on recovering performance at the top six worst- in the Energy Action Plan are implemented in parallel. By the end of the year, the group had 119 power purchase agreements performing stations that contribute more than 50% of unplanned load losses, (PPAs) in place for total capacity of 9 645MW, although not all of the while also sustaining performance at the stations that have shown reliable The Generation Recovery Office has been established, along with the projects are in commercial operation yet. Under the Renewable Energy performance. Operating, Maintenance and Outage Centres of Excellence, to drive the (RE-IPP) Programme, 90 renewable IPP projects with a capacity of implementation of the Generation Recovery Plan. The recovery plan 6 180MW are in commercial operation (2023: 6 105MW). We also relies on several focus areas, including plant condition, capacity, skills procure energy and capacity from two IPP OCGT peakers with a and experience, reducing fraud and corruption, strengthening policies capacity of 1 005MW, as well as through two short-term programmes and procedures, funding, environmental compliance, coal and new build and Government’s RMIPPPP, with capacity of 160MW and 150MW, defects. Station-specific plant-related actions have been consolidated to respectively. allow continuous tracking and monitoring. 75 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued Delays in bringing renewable IPP capacity online, compared to what was UPDATE ON FUTURE IPP PROGRAMMES 3 200MW wind and 1 800MW solar PV. Bid submissions closed on envisaged in the IRP 2019, continue to add pressure to the constrained Preferred bidders for bid window 5 of the RE-IPP Programme were 15 August 2024, with the announcement of the preferred bidders power system, often requiring the use of expensive OCGTs to make up announced in October 2021, with 25 projects identified totalling anticipated by December 2024. the shortfall. 2 583MW, comprising 1 608MW wind and 975MW solar PV. The Board approved the conclusion of PPAs with preferred bidders subject to Five preferred bidders totalling 513MW have been announced for the first In response to this and our capacity shortfall, we launched two stipulated conditions. Six preferred bidders for wind projects did not round of the Battery Energy Storage IPP Programme (BESIPPP). Approval programmes for short-term energy purchases from domestic generators, conclude PPAs. Of the remaining 19 projects that concluded PPAs, eight was obtained to buy the capacity and ancillary services as contained namely the Standard Offer and Emergency Generation programmes. projects failed to achieve commercial close. The remaining 11 projects, in the PPA, subject to certain conditions. A second procurement totalling 1 159MW, are in construction phase and anticipated to come round of 615MW for the BESIPPP was launched in December 2023 The Standard Offer provides a mechanism for Eskom to purchase to procure capacity for eight sites in the North West; bid submissions online between November 2024 and April 2025. energy from customers with excess generating capacity or from other closed on 29 August 2024, with the announcement of the preferred independent generators. The energy is purchased at the avoided cost Five preferred bidders for bid window 6 were announced in bidders anticipated by December 2024. A third procurement round of Eskom generation. Agreements for 620MW have been signed at December 2022, with another eligible bidder later being announced of 616MW for the BESIPPP was launched in March 2024 to procure 31 March 2024, and the additional capacity is expected late in 2024. as preferred, bringing the total capacity awarded to 1 000MW. Two capacity for five sites in the Free State; the closing date was extended to The one contract that had been operational was switched to the projects totalling 360MW reached financial close in April 2024 and are in 31 October 2024. Emergency Generation Programme. construction, with anticipated commercial operation dates of July 2025 and December 2026. The remaining four projects received an extension The then DMRE released an RFP for a gas programme in December 2023 The Emergency Generation Programme allows for the purchase of to procure 2 000MW of land-based gas-fired capacity at various sites, from the then DMRE to the end of March 2025 to achieve commercial energy from existing generators where additional capacity is available at with bid closing extended to 25 March 2025. close. Bid window 7 was announced in December 2023 with the release an appropriate price. Even though the cost of production might exceed of an RFP (request for proposal) for 5 000MW capacity, comprising the Eskom standard tariff, the cost would still be lower than our marginal cost of generation (mostly from OCGTs) and would mitigate against loadshedding. Contracts have been awarded to six participants; two ENERGY CAPACITY AND PURCHASES projects totalling 160MW are operational. IPP capacity available and the energy procured under various IPP programmes for the year to 31 March 2024 is set out in the following table. Did you know? Target Target Target Target Actual Actual Actual In the Standard Offer Programme, we set the price and generators Measure and unit 20271 2025 2024 met? 2024 2023 2022 can choose whether and how much to supply at that price. Under Total capacity, MW 16 325 9 164 11 082 7 495 7 110 6 831 the Emergency Generation Programme, suppliers bid a price and volume, and we decide whether to take up the energy. Total energy purchases, GWh 94 799 23 921 28 537 20 183 17 957 15 972 Total spent on energy, R million 213 238 58 771 61 837 49 407 43 400 36 714 The bid evaluation for the RMIPPPP resulted in the identification of Lease accounting adjustment, R million2 (13 492) (4 085) (2 392) n/a (1 632) (1 635) (1 511) 11 preferred bidders for total capacity of 1 996MW. We concluded Total expenditure, R million 199 746 54 686 59 445 47 775 41 765 35 203 PPAs with three of the projects totalling 150MW in June 2022; with an Weighted average cost, c/kWh3 225 246 217 244 242 230 additional two projects totalling 203MW in August 2023; and another two projects totalling 225MW in December 2023. The remaining four 1. The 2027 target is the cumulative target over the next three years. 2. For accounting purposes, the capacity charges for the Avon and Dedisa IPP gas peakers are treated as arrangements that contain a lease in terms of IFRS 16. Refer to note 2.8 in the projects totalling 1 418MW did not reach legal close due to outstanding financial statements for the related accounting policy. environmental and port authorisation issues, and, as such, did not meet 3. The weighted average cost is calculated on the total amount spent on energy, before excluding the lease adjustment. the long-stop date of 31 December 2023 imposed by the then DMRE. The first three projects totalling 150MW for solar PV with battery  efer to “Our interaction with the environment – Investing in renewable energy” on page 89 for information on energy supplied by renewable IPPs IR R storage went into commercial operation by December 2023. IPP capacity of 75MW of solar PV–based energy was commissioned during the year, against a target of 176MW for the RE-IPP Programme. Under other programmes, 310MW was commissioned, against a target of 1 800MW for the short-term programmes and 1 996MW from the RMIPPPP. We expect 894MW of renewable capacity and 410MW from other programmes to be commissioned during the coming year. IR F or a breakdown of IPP operational capacities by source, refer to “Plant information” on page 119 76 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued CROSS-BORDER POWER IMPORTS AND EXPORTS Nine of the 12 member countries of the Southern African Power Pool (SAPP) are interconnected. The SAPP supports reliable and economical electricity supply to member countries by coordinating among member utilities the planning and operation of the electric power system. INTERNATIONAL SALES AND PURCHASES Target Target Target Target Actual Actual Actual GWh 20271 2025 2024 met? 2024 2023 2022 International sales 30 825 10 355 10 789 10 362 11 437 13 298 International purchases 23 389 9 990 10 753 9 150 8 654 8 500 Net sales 7 436 365 36 1 212 2 783 4 798 1. The 2027 target is the cumulative target over the next three years. International sales volumes decreased by 9% year-on-year, partly due to increased implementation of load curtailment of cross-border customers with firm power supply agreements in accordance with NRS048-9, coupled with suspension of non-firm power supply agreements during loadshedding and periods of generation supply constraints. Furthermore, customer efficiencies have also resulted in lower offtake from Eskom. International purchase volumes increased by 6% year-on-year, mainly due to higher offtake by Eskom from Hidroelèctrica de Cahora Bassa (HCB), because of Electricidade de Moçambique (EDM) in the south of Mozambique not taking up their full allocation. GROWING POWER IMPORTS Transmission is pursuing a short-term energy purchase programme from cross-border utilities and cross-border IPPs as one of the key NECOM initiatives to assist in alleviating loadshedding. We have obtained the necessary government approvals required to enable procurement of power from the region and launched the Cross-Border Standard Offer Programme in October 2023. Under this programme, cross-border procurement will be undertaken utilising a standard offer mechanism. The static energy rate utilised will be renewed and approved annually and will be reflective of the avoided cost of generation. We have received applications from IPPs in Mozambique, Namibia, Zambia and Botswana. After evaluation, PPAs will be negotiated and concluded subject to budget availability. NETWORK PERFORMANCE Our network consists of transmission infrastructure, with high-voltage lines evacuating energy from our power stations, and our distribution network, which distributes electricity from the transmission network and IPPs to customers. We also supply redistributors (municipalities and metros) that manage their own distribution networks. IR Detail of our transmission and distribution infrastructure is set out on page 120 77 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued The intended benefits of the DDMP are: Target Target Target Target Actual Actual Actual Measure and unit 2027 2025 2024 met? 2024 2023 2022 • Reducing the usage of expensive OCGTs, especially during evening peak times Number of system minutes lost <1, minutesSC, 1 3.53 3.53 3.53 3.29 4.71 2.88 • Minimising the impact of loadshedding Number of major incidents >1 minute, number 2 2 2 1 1 2 • Optimising the national system profile through load management/peak System average interruption duration index (SAIDI), hoursSC 37.0 38.0 38.0 34.9 35.5 35.5 clipping and energy efficiency measures System average interruption frequency index (SAIFI), events 17.0 17.5 18.0 11.7 11.8 12.3 • Creating system flexibility and providing reliability to the Transmission Restoration time, %2 91.9 91.5 91.3 93.1 92.2 93.4 System Operator Distribution energy losses, % SC 9.36 9.65 9.48 9.92 9.74 9.62 The DDMP intends to achieve 1 250MW demand reduction capability 1. One system minute is equivalent to interrupting the whole of South Africa at maximum demand for one minute. through demand-side management and demand response interventions 2. Restoration time considers the time it takes to restore supply during an unplanned outage by measuring the percentage of dispatched work orders where power is restored within 7.5 hours. over the next three years. Transmission system reliability performance for system minutes lost <1 Adverse weather conditions also resulted in higher fault volumes leading ENERGY LOSSES AND EQUIPMENT THEFT improved significantly against the prior year, supported by a reduction to major equipment failures which require longer repair times. Theft, We continue to experience both technical and non-technical losses on in the number of interruption incidents, improved restoration response vandalism, overloaded networks and transformers remain a constant our networks. and reduced exposure to theft-related events. A major incident in the challenge that not only increase interruptions, but also consume resources Northern Grid in October 2023 resulted in a total interruption of two that could be allocated to addressing network faults and other incidents. Did you know? system minutes to transmission customers. Despite these challenges, restoration time performance improved Technical energy losses are an inherent consequence of However, switchgear failures arising from ageing infrastructure and through optimised dispatching solutions. electricity network operation, arising from energy lost as heat frequent operation for loadshedding continue to remain a challenge. when power flows through equipment such as cables, overhead The focus remains on the implementation of revised maintenance Did you know? lines, transformers and substation equipment, and occurring in practices given loadshedding operating requirements, as well as sustaining To address these challenges and improve the customer experience, transmission and distribution equipment. high levels of maintenance execution, restoration response, line fault we piloted a load limiting project during the past year. Under this Non-technical losses include electricity theft, illegal connections, reduction and replacement of assets in poor condition. project, customers with smart meters receive a limited supply of tampering and bypassing of electricity meters, as well as the 10A during loadshedding in stages 1 to 4. The customer enjoys purchase of illegal electricity tokens, known as ghost vending. It Furthermore, Transmission line fault performance continued to be impacted the benefit of around 2 300MW of supply instead of experiencing by bird-caused and veld fire-induced faults. Bird guards are being installed in further includes meter reading and billing errors. loadshedding, and we benefit financially from the continued sale priority areas and have resulted in improvements in targeted areas. of electricity, even if at a lower level. In addition, as the network is The Transmission Development Plan (TDP) 2022 requires investment in never de-energised, the risk of theft and vandalism is reduced, and Energy losses on our networks have increased to 11.94% overall strengthening the national transmission system over the next 10 years we have also seen a reduction in network faults. This innovative (2023: 11.76%), with 9.92% relating to the distribution environment with 14 218km of transmission lines and 122GVA of transformer approach results in a win-win for Eskom and our customers. The (2023: 9.74%) and 2.23% to transmission lines (2023: 2.32%). Total capacity, equating to 170 transformers. Innovative project delivery intention is to roll out the project to more customers over time. distribution energy losses amounted to 19.1TWh for the year models and partnerships are being explored and implemented to drive (2023: 19.2TWh). accelerated delivery of the TDP, to enable grid connection of 37GW To modernise the distribution grid and sustain network performance in support of new revenue contribution, Distribution plans to construct Network constraints and overloading contribute to technical losses on of new generation capacity in South Africa – the majority of capacity is around 4 000km of medium and high-voltage lines and add transformer our ageing medium-voltage networks. To minimise technical losses on targeted in the Western Cape (12GW), Eastern Cape (7GW), Northern capacity of about 1 400MVA, or 482 transformers, during the next five medium-voltage networks, feeders with voltage phase imbalances are Cape (6GW) and Mpumalanga (5GW). This TDP is the most ambitious years. Significant grid investment is required to sustain and improve corrected, contributing to a reduction in energy losses. undertaking that the Transmission business has ever faced. network performance going forward, and the capital allocation has been increased by about 27% over the next five years. Non-technical losses are estimated at around 73% of total Distribution The Distribution network continued to perform well despite high losses (2023: 70%), or 13.9TWh for the year (2023: 13.4TWh). The cost levels of loadshedding, theft and vandalism, and capital constraints. In addition to existing demand response arrangements with key industrial of non-technical losses is estimated at R6.4 billion for the year (2023: Loadshedding also negatively impacts plant reliability, contributing to customers, we have launched the Distribution Demand Management R5.6 billion), and it has a significant financial and operational impact premature equipment failure. Although loadshedding events are excluded Programme (DDMP) to further assist in managing demand to manage on Eskom. from technical measures, consequential failures outside the designated system constraints. The role of demand-side management is to influence loadshedding blocks are not excluded, thereby negatively impacting the electricity demand profiles of end-use customers for the benefit of performance. local, regional and national power system needs. 78 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued Ghost vending in perspective To address non-technical losses, we are converting conventional meters Ghost vending has two distinct sources, namely illegal vending can be recognised from the illicit consumption of electricity as there is to smart prepaid meters, focusing on those users most likely to be from offline credit dispensing units (CDUs) (possibly in the hands no compensation for the electricity delivered. involved in the use of illegal tokens. Our KRN rollover project, completed of external criminals) and online vending fraud emanating from in November 2024, required the base date of all legacy prepayment fraudulent activities on the Eskom vending system (possibly in the Therefore, the risk to Eskom manifests in the form of both redeemed meters to be reset. However, there remains a risk that illicit tokens hands of Eskom staff managing and operating the platform). and unredeemed tokens. Redeemed tokens relate to a realised loss for created can still be used after the rollover. delivery against illicit tokens used in the current year, which forms part of Eskom implemented the online vending system (OVS) in 2008 as a the distribution energy losses of 19.1TWh for the year, where electricity We are also prioritising illegal connections for normalisation. One of the critical revenue collection system to combat ghost vending through was consumed without payment. Unredeemed tokens represent a ways is by engaging community leaders, to encourage communities to play offline CDUs, by selling encrypted electricity tokens using a standard possible loss in the future as no corresponding revenue will be received. an active role in managing electricity infrastructure and the safe use of transfer specification (STS), which Eskom introduced to South Africa. electricity. Eskom only uses the OVS to dispense tokens to customers of Eskom The potential obligation emanating from the exposure that illicit tokens can be used in the future cannot be reliably measured because Theft of overhead aluminium conductor, copper cable and pylon tower and those municipalities that make use of Eskom’s OVS platform. members continue to negatively impact our operations and result in of the high level of uncertainty around the number of illicit prepaid The OVS enables customers to purchase prepaid electricity via virtual electricity tokens generated and the number of tokens already utilised, significant financial losses. We employ effective risk management, intelligence channels, such as banking apps, remote terminals such as ATMs located as well as those tokens that remain compatible with Eskom meters gathering, stakeholder engagement and the deployment of innovative security in retail outlets, or using other vending stations. The system vends after the key revision number (KRN) rollover. technologies to mitigate security threats. Intrusion detection technology in electricity tokens from the main Eskom central server through approved substations, disruption operations and successful arrests have contributed national vending agents using a secure backend in real time. The system An independent IT forensics company is conducting an investigation to a decline in incidents. Furthermore, where copper cable is stolen, it is should not permit any external vending channel to vend a token if to highlight vulnerabilities in the OVS. We will implement their replaced with other materials with a lower market value. the vending agent cannot communicate with the Eskom server (e.g. recommendations to strengthen security on the system, as well when the system is offline) or cannot be authenticated via the secure as implement end-to-end solutions to improve detection and Did you know? protocol. Once the token is generated, it is encrypted and stored in the interruption of the redemption of illegally generated prepaid According to the Economic Sabotage of Critical Infrastructure OVS database and sent to the customer by the vending agent. Once electricity tokens. We are also exploring the replacement of the entire Forum, the theft of copper in South Africa is estimated to cost the the customer enters the token, the prepaid meter decodes the 20-digit system in the future. country R46.5 billion a year across the forum’s various portfolios. token using the STS security protocol, and only accepts the token if all The Audit and Risk Committee (ARC) acknowledged that the prepaid the related information matches the OVS system and is accepted as electricity ecosystem exposes Eskom to various risks, including the Losses related to conductor theft, cabling and related equipment valid. If the information does not match, the token will be rejected. creation and use of illicit tokens and the overreliance on a single supplier amounted to R120 million for the year (2023: R197 million), arising from However, despite these controls, a recent investigation uncovered the for the related software and hardware solutions. There is also a possible 2 417 incidents (2023: 2 522 incidents). To combat electricity theft in all bulk generation of illegal prepaid tokens on Eskom’s online vending conflict of interest, as the supplier is a distributor of tokens. The its forms, we continue to collaborate with SOCs that are affected by the system. It is suspected that collusion between Eskom staff and illicit committee provided oversight of the progress of the investigation into same challenges, industry role players, the South African Police Service operators breached security controls to facilitate the generation of the breach of the OVS and the implementation of action plans, which and the National Prosecuting Authority. These actions led to 130 arrests fraudulent prepaid electricity tokens. The means by which the tokens include improved cyber-security controls to prevent the creation of during the year (2023: 167). are sold in the market has not been established, as illicit tokens are illicit tokens as far as possible. being traded in many ways. This creates an active market for the illegal ARC requested that all service level agreements in the prepaid sale of prepaid electricity tokens at reduced prices in comparison to electricity ecosystem be reviewed and that the related risks are tokens sold by Eskom and its registered vendors. evaluated and appropriately addressed. This could include the possible When an illicit token is loaded into a prepaid meter, the token will be exit of agreements where the risk is considered intolerable, as well as accepted and will update the meter with the available credit kilowatt- implementing a process where national vending agents must provide hours. The illicit tokens that have been issued also create an obligation assurance reports on controls and submit independent confirmation for Eskom to deliver electricity and incur the related cost of providing that their systems are secure and that they are only selling valid electricity when a token is loaded onto a prepaid meter. No revenue prepaid electricity tokens. AFS For more information on the implications and the actions being taken to address the breach, refer to the directors’ report. Note 44.2 in the financial statements deals with the associated contingent liability 79 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued DELIVERING CAPACITY EXPANSION MEDUPI AND KUSILE PROJECT PERFORMANCE Since inception of our capacity expansion programme in 2005 to 31 March 2024, installed generation capacity has increased by 15 529MW, At Medupi, five units are in full commercial operation, supplying energy to high-voltage transmission lines by 8 622km and transmission substation capacity by 39 528MVA. The programme is expected to be completed by the national grid. The sixth and final unit achieved commercial operation the 2028 financial year. on 31 July 2021. As indicated earlier, Unit 4 is expected to be offline until the second quarter of the 2025 financial year, following the generator Target Target Target Target Actual Actual Actual explosion in August 2021. The focus is on completing the remaining Measure and unit 20271 2025 2024 met? 2024 2023 2022 balance of plant (outside plant) scope of works, remedial works, the resolution of claims and project close-out. Generation capacity installed and commissioned (commercial operation), MWSC, 2 1 600 800 800 – 799 794 Transmission lines installed, km SC 1 571.0 286.0 166.0 74.4 326.1 180.5 At Kusile, four units have achieved commercial operation. Units 1 to 3, Transmission transformer capacity installed and commissioned, MVA SC 12 380 2 380 160 23 – 1 065 which were offline due to the flue gas duct failure in October 2022, have been successfully returned to service using temporary stacks. 1. The 2027 target is the cumulative capacity or lines to be commissioned and/or installed over the next three years. 2. The 2025 Generation capacity target is a repeat of the 2024 target (i.e. the delivery of Kusile Unit 5, which was not achieved in the 2024 financial year), whereas the cumulative target On 17 September 2022, the gas air heater (GAH) on Kusile Unit 5 caught to 2027 refers to the delivery of Kusile Unit 5 in the 2025 financial year and Kusile Unit 6 in the 2026 financial year. fire while executing the third boiler steam blows, being the last milestone activity prior to first synchronisation. As a result, all unit commissioning activities were discontinued. At that time, eight key commissioning Originally, we committed to the commercial operation (CO) of one Kusile The target for the installation of transmission lines was not achieved, milestone activities had been successfully achieved. A technical investigation unit in the 2024 financial year, but the gas air heater fire incident at Kusile due to tender pricing challenges which required the issuance of an was conducted, and the investigation report was finalised in February 2023. Unit 5 in September 2022 delayed the delivery of the unit by about a year. international tender, thereby delaying progress. The transformer capacity Nevertheless, first synchronisation to the grid was successfully achieved target was not achieved either – although the targeted capacity was The GAH fire incident significantly impacted the unit commissioning on 31 December 2023. Since then, the unit contributed energy to the successfully cold commissioned, challenges relating to protection schemes schedule as the GAH had to be fully repaired before commissioning grid, particularly over evening peaks, even though it will only operate delayed final commissioning to beyond the target date. activities, which included plant optimisation and capability tests, could at full power around-the-clock after reaching commercial operation on resume. GAH repairs were completed at the end of August 2023. 30 June 2024. This marks a significant milestone in sustainably improving First synchronisation of the unit to the grid was successfully achieved Eskom’s generation performance. on 31 December 2023, and the unit contributed up to 723MW to the national grid during the testing phase, which assisted in strengthening Group funded capital expenditure (excluding capitalised borrowing costs) per division the grid. Commercial operation was achieved on 30 June 2024, thereby adding 799MW installed capacity to the national grid. Target Target Target Actual Actual Actual Division, R million 20271 2025 2024 2024 2023 2022 Despite the significant schedule delays due to the GAH fire incident, the shareholder advised Eskom not to submit a second addendum to Generation 77 949 25 017 29 528 26 531 24 517 22 093 the shareholder compact for the 2024 financial year. The target for Transmission 44 268 6 732 5 960 4 269 3 543 3 028 commercial operation of Kusile Unit 5 was therefore not revised. Instead, Distribution 21 149 3 507 2 298 2 879 2 603 2 433 the measure and target were rolled over to the shareholder compact for Subtotal 143 366 35 256 37 786 33 679 30 663 27 554 the 2025 financial year. Future fuel (coal and nuclear) 13 670 5 350 3 227 2 769 2 861 2 418 Other areas including subsidiaries and intergroup eliminations 5 434 1 605 2 247 573 425 251 On Kusile Unit 6, key commissioning activities are underway, impacted by delays in receiving outstanding boiler and turbine materials at site. Total Eskom group funded capital expenditure 2 162 470 42 211 43 260 37 021 33 949 30 223 Four key commissioning milestones have been successfully achieved to 1. The 2027 target is the cumulative capital expenditure targeted over the next three years. An amount of R42.2 billion is targeted in 2025, with R56.4 billion in 2026 and R63.9 billion in 2027. support first synchronisation. The unit is expected to synchronise to 2. Capital expenditure includes additions to property, plant and equipment, intangible assets and future fuel, but excludes strategic spares, construction stock and capitalised borrowing the grid by February 2025, with commercial operation following around costs. Figures noted above are based on internal reporting, and do not necessarily align to the movement on property, plant and equipment as disclosed in the annual financial statements. six months later. Capital expenditure for the year was R6.2 billion lower than budget. Factors contributing to the variance include lower spend on Generation refurbishment The target for full project completion of Kusile is May 2027. projects and equipment, Transmission grid strengthening and refurbishment projects, as well as future fuel projects at the Matla, New Denmark, Khutala and Kriel collieries. Savings on capital expenditure was reallocated to fund spending on OCGTs. 80 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued CORRECTING MAJOR DESIGN AND CONSTRUCTION DEFECTS AT MEDUPI AND KUSILE Since inception, the completed interventions to correct the major plant defects at the new build projects have resulted in a steady improvement in the availability and reliability of units at Medupi and Kusile. The effective correction of the major plant defects will ultimately ensure that the plant achieves contractual levels of performance. At Medupi, the EAF is commendable, showing an average improvement of 20% since the effective correction of the major plant defects to about 75% for the past year, with some units running at or close to full load. The reliability and availability of the Kusile units is also improving steadily, with some units running at or close to full load, despite the use of temporary stacks. Progress on resolving the new build major plant defects at Medupi and Kusile is as follows: Major plant defect Project site Status Completion date Comments Air and flue gas ducting erosion Medupi, Kusile Complete Dec 2022 Completed Western fill: demineralised water tanks and water treatment laboratory Kusile Complete Jul 2023 Completed Control and instrumentation (C&I) repeated distributed control system Medupi Complete Sep 2023 Completed (DCS) card failures Milling plant defects Medupi, Kusile Complete Dec 2023 Agreement completed with contractor. Spares of five mills handed over to Eskom for installation during upcoming mill outages Pulse-jet fabric filter (PJFF) plant poor performance due to an inadequate Medupi, Kusile Complete Jun 2024 Solution completed with the OEM pulsing system and flue gas flow entry Gas air heater mechanical performance, erosion and operational Medupi, Kusile In progress Dec 2024 (forecast) Testing of final solution with OEM in progress performance in terms of ash carry-over and outlet temperature stratification Furnace exit gas temperature resulting in excessive reheater spray water Medupi, Kusile In progress Medupi: Dec 2024 (forecast) Spray flow installations have started, for completion as outages become available flow Kusile: Apr 2026 (forecast) The total estimated cost for the defect correction of all Medupi and The cost of executing the major defects correction plan is managed OTHER PROJECTS Kusile units, based on the currently available information, ranges between within the Board-approved Medupi and Kusile project budgets. To date, BATTERY ENERGY STORAGE SYSTEMS (BESS) R3.7 billion and R5.3 billion (excluding Eskom costs for DCS defects Eskom has incurred R571 million on boiler plant defects at Medupi and The distributed battery storage project addresses local system challenges correction), after completion of the due contractual process to determine Kusile, which is funded from operational maintenance expenditure. and supports transformational aspects by demonstrating large-scale contractual liabilities. The liable parties/contractors are held to account deployment in support of the South African renewable energy strategy. within the provisions of the relevant contracts and are fully responsible Additional plant defect corrections, undertaken with or without third party The project is co-financed by the World Bank, New Development Bank for the related major plant defect costs. involvement, are forecast for completion after 2027, depending on the extent and African Development Bank. of technical solutions and unit outage availability under the outage plan. Phase 1 of the project will comprise 800MWh of battery storage and consists of four separate packages. Package Sites Province Status Progress 1 Hex Western Cape Complete Construction was completed in June 2023, and the site was officially opened on 9 November 2023. Rehabilitation has been successfully concluded and the process of re-establishing natural vegetation is in progress. The site is operational 2 Pongola and Elandskop KwaZulu-Natal Complete The sites achieved commercial operation on 15 October 2024 3 Skaapvlei, Paleisheuwel and Graafwater Western Cape In progress Construction is in progress at all three sites. Manufacturing and delivery of all battery equipment is complete. Commissioning completion is forecast towards the end of the 2025 financial year 4 Melkhout and Rietfontein Eastern Cape and Northern Cape Contracting Received a no-objection decision from the funders to proceed. Contract award is forecast by the end of December 2024 Phase 2 of the project relating to Distribution substations is on hold given Government’s debt relief conditions and the unavailability of funds from our own reserves. However, the Komati PV and BESS project of 600MWh has been separated from Phase 2; that project can continue based on the existing approval. PFMA approval has been requested from DPE and National Treasury, and the NERSA licence applications are in progress. 81 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our infrastructure continued MEDUPI FGD RETROFIT RT&D PROJECTS • Contracting additional capacity under the short-term IPP programmes Kusile is fitted with FGD as an atmospheric emission abatement In the short term, our Research, Testing & Development (RT&D) strategy and developing other programmes to alleviate short-term capacity technology to reduce the release of SO2 from the stacks into the is focused on operational recovery of the three line divisions. In the constraints atmosphere. The FGD plant removes oxides of sulphur, in line with medium term, the strategy seeks to assist the business in transitioning • Facilitating the conclusion of PPAs with the preferred bidders under international best practices, to ensure compliance with air quality away from coal, and in the long term, to assist the business in being a Government’s various IPP programmes standards. leading clean and green energy company to enable competitiveness, • Supporting Government’s IPP Office to execute additional sustainability, profitability and new growth areas. programmes such as the battery storage and gas programmes The initial business case for Medupi Power Station was approved based on a commitment to retrofit FGD to the units within six years Several high priority projects are underway, including: • Actively seeking cross-border trading opportunities to assist the Eskom of commissioning each unit during general overhaul outages. The FGD power system • Considering the feasibility of turning coal fines (powder) into briquettes retrofit was a condition of the World Bank funding for the Medupi that can be used in coal-fired power stations • Sustaining transmission system reliability performance and reducing project; it will also support our air quality strategy to comply with the number of line faults, while executing the TDP and Transmission • Trialling options for the removal of organic compounds in raw water atmospheric emission standards and reduce emissions. sustainability improvement initiatives supplied by the Mokolo Water project to Medupi Power Station • Modernising the distribution grid and sustaining network performance The project is in the development phase. IFC has approved the revised • Testing the operating variability of coal-fired units at minimum levels to support new revenue contribution through capital investments strategy from being technology-agnostic to incorporating the main option to support the penetration of renewable energy • Building distribution network resilience to facilitate increased of wet FGD. Funding for the project has been approved for the 2024 to • Reviewing air quality data based on ground-based and satellite distributed energy resource integration (microgrids, small-scale 2029 financial years. assessments embedded generation and rooftop solar) and wheeling while • Evaluating the levels of and trends in several priority air pollutants in maintaining network performance standards The RFP for the Eskom owners’ engineers – who will oversee the work of the vicinity of our power stations and areas where air quality offset the contractor during execution – was issued to the market in May 2024; • Driving demand-side management initiatives to support the programmes are being implemented the closing date was extended to August 2024. The request for proposal constrained power system • Providing options for more cost-effective transmission lines based on for the execution of the FGD contract was issued to the market in • Installing smart meters for new customers and all residential customers direct-current lines, which are capable of transmitting power at high September 2024, with the closing date in December 2024. Considering over the next five years, to enable customers to manage consumption voltages over long distances the market dynamics and inflationary escalations, the 2018 approved cost and support the business in reducing energy losses of R38.4 billion for wet FGD has been revised to R41.7 billion; this will be • Enabling the capacity uprating of transmission lines as a way of • Collaborating with law enforcement agencies to enhance the security reviewed and updated after conclusion of the tenders. deferring more capital-intensive projects of our infrastructure and sites FUTURE FOCUS AREAS • Completing Medupi and Kusile power stations within the Board- The revised formal agreement between Eskom and the World Bank is • Pursuing additional dispatchable generation capacity of 4 000MW to approved revised full project completion dates of the 2026 and 2028 that the FGD abatement technology would be installed by no later than 6 000MW to support the stability of the power system, create space financial years respectively, together with effectively correcting all 30 June 2027. Based on the revised strategy, the installation date for the for reliability maintenance and reduce the need for loadshedding the major plant defects at Medupi and Kusile to enable technically FGD in all the units was revised to September 2032. However, the project • Executing the Generation Recovery Plan to recover plant performance acceptable performance for new plant schedule remains highly dependent on the successful contractor’s execution schedule and the technology selected after the RFP process, as well as over the medium to long term and thereby improve Generation’s • Effectively executing Generation emission-control and technical plan the power station outage plan. The World Bank is regularly informed and financial, operational and environmental sustainability projects updated on the status and progress of the project, and will be provided with • Successfully executing the Koeberg Unit 2 steam generator • Driving completion of the Medupi FGD and battery storage projects, a more accurate programme after contract award to the chosen Engineering, replacement outage and the LTO project to extend the life of the subject to funding constraints given the debt relief conditions Procurement and Construction (EPC) supplier. station • Leading the Just Energy Transition and using repurposing and Meeting the atmospheric emission licence (AEL) conditions and lender repowering as an alternative to full decommissioning of power timelines remains at risk. We continue to engage with the shareholder station sites and other relevant stakeholders on a possible extension. 82 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment SECURING OUR RESOURCE REQUIREMENTS To generate electricity, we require coal, fuel oil, water, nuclear fuel and Normalised coal stock  to Particulate emissions at Kusile Units 1, diesel as primary energy sources. These have to be sourced, procured 45 days 0.79kg/MWhSO 2 and 3 and delivered to our power stations in sufficient volumes and at the recorded the worst performance in appropriate quality, at the right time and at an affordable cost. in an effort to improve station reliability returned to service using temporary stacks decades and security of supply after flue gas duct failure SECURING OUR COAL REQUIREMENTS 2024 0.79 COAL SUPPLY STRATEGY 2024 45 Target 0.30 Much of our generation capacity is driven by fossil fuels, mainly coal, with Target 32 2023 0.70 more than 80% of our generation capacity and around 90% of the energy 2023 29 2022 0.34 we supply coming from coal-fired power stations. Given this, and the fact 2022 42 that coal costs comprise about 60% of our own primary energy costs, the management of coal is a key area of focus, which affects both our financial and operational sustainability. Our Primary Energy Department continues Specific water consumption at Environmental legal contraventions at CO2 equivalent emissions of to engage with coal mines to ensure that the necessary controls are in place to supply the correct quality and quantity of coal to our power stations. 1.43ℓ/kWh 68 incidents 190.9Mt Our long-term coal strategy favours dedicated long-term coal contracts sent out  slightly due to a change remained unacceptably high remained stable with coal delivered by conveyor, based on the coal quality specification of in generation mix and maintenance 2024 68 2024 190.9 the different power stations. challenges at stations 2023 105 2023 187.9 2022 The volumes and value of coal purchased over the past year were made 2022 65 207.7 2024 1.43 up as follows: Target Target Target 1.38 2023 1.39 Coal volumes, % Value of coal purchased, % 2022 1.45 34 29 39 As an electricity utility, we need to focus on effective environmental to reduce NOx emissions. Kusile is being commissioned with flue gas management practice to exercise our environmental duty of care and desulphurisation (FGD) technology to reduce SO2, while Medupi will be ensure compliance as well as sustainability of the business. We are retrofitted with FGD after completion. Koeberg Nuclear Power Station conscious of the waste and emissions that we discharge and the nature- uses very little fresh water, with nuclear being considered a low-carbon related impacts and dependencies of our operations, including the impact technology. 44 of our operations on the communities affected by our infrastructure. In the long term, we need to diversity our energy mix to achieve a lower Ultimately, sustainability in an Eskom context refers to actions to reduce 27 emissions and greenhouse gases, as well as managing scarce natural 27 environmental footprint. This area of focus also covers our carbon emissions and mitigates against climate risk. resources – this includes water usage and the management of land, Cost-plus Fixed-price Cost-plus Short/medium-term contractsFixed-price biodiversity and waste – together with effective upgrades to the grid Short-/medium-term contracts We have several initiatives in place to reduce our environmental to enable renewable capacity. Furthermore, these actions also have footprint, such as implementing projects to reduce particulate emissions; to consider our social impact, especially in the communities where we Over the past year, we’ve seen a slight increase in coal supplied from taking less efficient units out of service when possible to reduce water operate. short and medium-term contracts, as we’ve increased our coal stock use and emissions; and utilising dry-cooled technology in our newer coal- levels at all stations to support operational sustainability aligned to the fired stations, namely, Matimba, Kendal, half of Majuba, Medupi and Kusile. We remain dedicated to understanding and minimising our environmental Generation Recovery Plan. Accordingly, the year-on-year increase in the To improve air quality, units at Medupi and Kusile are commissioned with impact. We take a comprehensive approach to improving our carbon average cost per ton of coal purchased amounted to 6.6% (2023: 12.6%, fabric filter plant to reduce particulates, as well as low NOx technology footprint and strive for sustainability in all that we do. restated due to a prior year accounting adjustment). 83 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued Our top 10 coal suppliers are set out below. TECHNICAL PERFORMANCE Supplier Contract type Target Target Target Target Actual Actual Actual Measure and unit 2027 2025 2024 met? 2024 2023 2022 Exxaro Coal Mix of cost-plus and fixed-price Coal burnt, Mt1 102.17 90.20 99.52 n/a 99.48 102.38 110.30 Seriti Coal Mix of cost-plus and fixed-price Coal purchased, Mt1 106.24 91.07 106.08 n/a 107.45 98.42 108.70 Universal Coal Fixed-price Coal purchase R/ton, % increaseSC, 2 10.0 10.0 10.0 6.6 12.6 2.1 Salungano (previously Wescoal) Fixed-price Coal stock days 79 92 96 80 65 76 Glencore Fixed-price Normalised coal stock days, budgeted standard daily burn3 32 32 32 45 29 42 HCI Coal Fixed-price 1. From 1 April 2022, pre-commissioning burn is no longer capitalised to the asset and instead recognised in primary energy cost. However, pre-commissioning burn is still excluded from the figures reported above. The current year figure excludes 537kt coal burnt during the commissioning at Kusile (2023: 492kt). Mbuyelo Fixed-price 2. The figure for 2023 has been restated due to a change in accounting treatment. Full details are available in note 48 of the financial statements. African Exploration Mining and Fixed-price 3. Normalised coal stock days exclude coal at Medupi. Finance Corporation The average coal cost increase was kept within the target of 10% mainly Over the next decade and beyond, total water usage is expected to Mwelase Mining Fixed-price by better production at cost-plus mines which lowers the coal unit cost, as decrease as wet-cooled coal-fired power stations shut down, the dispatch Overlooked Group Fixed-price well as by procuring short and medium-term coal at more favourable rates. of dry-cooled stations increases, and the transition towards renewable, (previously Sudor Coal) nuclear and gas energy supply takes place. Nevertheless, the retrofitting As indicated earlier, there has been a focus on recovering coal stock days of emissions abatement technology will increase the water use of the In support of our long-term coal strategy, we have issued requests for over the past year, resulting in a significant improvement in recovering remaining coal fleet. We have provided water demand to DWS to allow proposals (RFPs) for fixed-price agreements to the market. A long-term coal coal stock days since the beginning of the financial year. At year end, as a for its national and catchment planning and water reallocation strategy. supply agreement (CSA) for Kusile is being concluded, with an agreement for result of the stock day recovery programme, all stations were at or above These water scenarios will be updated when needed. the next three years already in place. Arnot also has a CSA in place. expected stock levels (2023: six stations below minimum levels). Under the Camden, Duvha, Kriel, Matla and Tutuka RFPs, engagements SECURING OUR WATER REQUIREMENTS IR For a discussion of our water usage, refer to “Managing water Our generation process is highly reliant on a secure supply of water of consumption” on page 87 in this section with shortlisted tenderers to cater for the coal shortfall requirements are moving ahead. A five-year CSA for Camden has been concluded, the appropriate quality, given the criticality of adequate surface water while five contracts have been concluded under the Duvha RFP, with for cooling and demineralised water requirements, as well as a variety The Integrated Vaal River System (IVRS) storage level was at 90% on of other uses in operations. This requires a high availability of water another two to follow. One CSA from the Matla RFP is at the final stage 30 March 2024 (27 March 2023: 100%). The IVRS yield is expected to infrastructure to maintain security of water supply. Existing water supply of contracting. Supply contracts are carefully managed based on the remain in deficit until Phase 2 of the Lesotho Highlands Water Project is agreements ensure security of supply to existing coal-fired generation expected life of stations to avoid penalties and surplus coal stock. commissioned by 2028. However, modelling of the IVRS does not require power stations. These agreements, where required, will be modified or water restrictions over the next four years, due to sufficiently high dam levels. Negotiations on the extension of existing cost-plus agreements for renewed in accordance with the lifespan of our power stations. Lethabo, Kendal and Tutuka continue. At Matla, the cost-plus CSA has been Planned maintenance will be conducted from 1 October 2024 to The water supply agreement between Eskom and the Rand Water Board extended, and negotiations are in progress to renew the cost-plus CSA. 31 March 2025 on the Lesotho Highlands Water Project Phase 1 on the was extended for another 15 years effective from April 2023. The Vaal River Eastern Sub-System Memorandum of Agreement with the Department of transfer and delivery tunnel from Katse Dam to Ash River outfall. Water Coal quality supply from Vaal Dam to Eskom’s power stations will not be impacted: Coal-related load losses accounted for 0.75% OCLF for the year (2023: Water and Sanitation (DWS) for the supply of raw water to Eskom power stations in Mpumalanga was extended for another two years to 31 March 2026. when Vaal Dam’s level drops below 25%, water can be transferred 0.73%), with 99% of the losses occurring at Matla. Nevertheless, there from Grootdraai and Sterkfontein dams. Power stations are required to has been significant improvement in the coal quality of both conveyor-fed The Mokolo Crocodile Water Augmentation Project (MCWAP) Phase 2A is under development by the Trans Caledon Tunnel Authority with a planned prepare for poor water quality and low pumping from Vaal Dam. coal from the tied colliery and other coal delivered by road. We continue water delivery date of May 2029 to meet Medupi’s FGD retrofit date and to to focus on various projects to improve Matla’s coal quality, and we’re The Mokolo River System supplies raw water to Matimba and Medupi ensure long-term water security to Matimba and Medupi power stations. engaging with the mine to determine how the future coal supply could be power stations. The Mokolo Dam level stood at 100.3% at 30 March 2024 beneficiated to meet Matla’s coal quality specifications. Under an interim To ensure that we continue to have access to adequate water resources, (27 March 2023: 101.5%). The risk of water curtailments to Eskom is low, solution, coal from other sources will be mixed with coal from the tied we engage DWS on planning, operational and strategic matters that will but cannot be ruled out until the MCWAP Phase 2A is commissioned, colliery to improve coal quality. have an impact on our water supply and associated infrastructure. In which is now expected by May 2029. The project will augment water supply addition, continue to influence various water strategies and policies such to Lephalale, as well as to Matimba and Medupi and Exxaro’s Grootegeluk Initiatives such as verification sampling are ongoing and have resulted in mine. The 2024 annual operating analysis of the system indicated a risk of as the National Water Resources Pricing Strategy, the National Water improved coal quality from short and medium-term suppliers across the Resources Infrastructure Agency Bill, as well as the formation of the water curtailment for the Mokolo River Water Supply System for 2026 system. catchment management agencies. 84 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued to 2028 years. However, no curtailment for power generation is currently indicated during this period, given the delays in the Medupi FGD retrofit, Target Target Target Target Actual Actual Actual combined with good rainfall seen recently. Measure and unit 2027 2025 2024 met? 2024 2023 2022 Water supply constraints being experienced within Gauteng necessitates Relative particulate emissions, kg/MWh sent out SC, 1 0.30 0.30 0.30 0.79 0.70 0.34 that we implement water conservation and water demand management Specific water consumption, ℓ/kWh sent out SC, 1 1.36 1.37 1.38 1.43 1.39 1.45 measures at our facilities and buildings and that we activate business Net raw water consumption, Mℓ2 n/a n/a n/a n/a 260 680 256 430 283 610 continuity plans during periods of water restrictions and outages by Rand Environmental legal contraventions reported as a result of significant failure Water Board and municipalities. – – 1 7 10 7 of business systems, number3 Overall, the risk of water supply interruptions remains due to raw Carbon dioxide (CO2), Mt 2, 4 n/a n/a n/a n/a 190.4 187.5 207.2 water supply infrastructure being unavailable and unreliable. DWS has Nitrous oxide (N 2O), t 2, 4 n/a n/a n/a n/a 1 382 1 438 1 561 appointed maintenance contractors to address the maintenance backlog Methane (CH4), t 2, 4 n/a n/a n/a n/a 1 523 1 483 1 466 by planning outages and returning critical plant to service. Water quality Carbon dioxide equivalent (CO2e), Mt 2, 4 n/a n/a n/a n/a 190.9 187.9 207.7 deterioration, especially in the upper Vaal River System, poses a risk to Sulphur dioxide (SO2), kt 2, 4 n/a n/a n/a n/a 1 431 1 449 1 671 several power stations that need to refurbish and upgrade their water Nitrogen oxide (NO x as NO2), kt 2, 5 n/a n/a n/a n/a 735 743 822 and waste treatment facilities, which may negatively impact the cost Particulate emissions, kt2, 4 n/a n/a n/a n/a 145.30 129.32 66.65 of production. Quarterly meetings between DWS, Eskom and other affected parties are held to resolve the water supply infrastructure and 1. Relative particulate emissions values and specific water consumption include all units at Medupi as well as Kusile Units 1 to 4. Units are only included one year after achieving water quality risks that have been identified. commercial operation, therefore Kusile Unit 5 is still excluded; Kusile Unit 4 has been included since 1 June 2023. At stations with unusually high emission levels, such as Kendal, the monitors often exceed their maximum limits, resulting in an under-reporting of total emissions and relative performance. 2. No target is set for net raw water consumption or for emission volumes. Therefore, the target for these measures is shown as not applicable. SECURING OUR NUCLEAR FUEL REQUIREMENTS 3. These relate to specific cases of environmental legal contravention incidents that are of high significance in terms of the impact on the environment and/or on Eskom in that they have Existing contracts with Westinghouse and Framatome for the supply of a material business impact and illustrate a significant failure of business systems. nuclear fuel fabrication services and the delivery of fabricated nuclear fuel are 4. Emission figures are calculated based on coal characteristics and power station design parameters using coal analysis and coal burnt tonnages. Figures include coal-fired and gas sufficient to meet Koeberg’s nuclear fuel demand until the end of 2025. We turbine power stations, as well as oil consumed during power station start-ups. 5. N2O and NOx reported as NO2 are calculated using average station-specific emission factors (which are measured intermittently) and tonnages of coal burnt. are preparing to go to the market to negotiate new fuel fabrication service contracts. The contracts are envisaged to be placed in 2025 for supply from 2026 onwards. We also hold contracts valid until 2028 for the supply of PARTICULATE AND GASEOUS EMISSIONS RELATIVE PARTICULATE EMISSIONS enriched uranium product, which is used in nuclear fuel fabrication. Burning coal to generate electricity produces greenhouses gases, Relative particulate emission performance continued to decline since particularly carbon dioxide (CO2) as well as three major pollutants in the the prior year, with focused maintenance of the generating plant not yet AFS For further information on nuclear fuel balances, refer to note 10 on form of emissions: particulate matter (PM), sulphur dioxide (SO2) and yielding results. This is the worst performance since 1995, when 0.76kg/ future fuel supplies and note 13 on inventories in the annual financial nitrogen oxides (NOx). The National Environmental Management: Air MWh sent out was recorded, before emission-related upgrades at statements Quality Act, 2004 (NEMAQA) requires the installation of technology to many stations. reduce emissions. Since the early 1980s, we have implemented pollution reduction technology to substantially reduce particulate matter emissions Kriel, Matla, Kendal and Lethabo continue to show very poor REDUCING OUR ENVIRONMENTAL FOOTPRINT performance and together, these stations emitted more than half and, more recently, NOx emissions. Kusile Power Station is our first The material impact of our operations on the environment is addressed of the ash that Eskom released into the atmosphere. Reasons for power station to have FGD installed to reduce sulphur dioxide emissions, through the implementation of plans with governance oversight. These poor performance include ash and dust handling plant issues; poorly while Medupi Power Station will be retrofitting FGD. include strategic water management implementation plans, as well as emission performing and damaged electrostatic precipitators (ESPs) which limit reduction and air quality improvement plans at generation facilities, together particulate emissions; poor sulphur conditioning (SO3) plant performance. with proactive and reactive bird mitigation projects on our power lines. IR F urther details of particulate and gaseous emissions are available in the There are also occasions when power stations continue operating with technical statistical table on page 115 high emissions due to electricity supply constraints. We use several KPIs to measure the effectiveness of our interventions, including relative particulate emissions, specific water consumption To address the poor performance, Generation continues its drive and the number of reported legal contravention incidents as a result of to entrench a culture of achieving environmental compliance, with a significant failures of business systems. renewed focus on the importance of compliance for sustainable asset management while stations are implementing emission recovery actions. IR Refer to page 122 for information on the environmental implications of using or saving electricity 85 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued Kendal emission challenges GASEOUS EMISSIONS It is estimated that all coal-fired units have operated in non-compliance Kendal continues to implement the agreed-upon emission recovery plan as SO2 emission limits with their allowable daily limits for particulate matter emissions on 2 235 a condition of the AEL compliance directive received in 2019. Repairs on There have been seven SO2 exceedances of daily limits recorded by operating days (for all units) combined during the year (2023: 1 109 days). all units have now been completed. The station is progressively working coal-fired power stations during the year (2023: five). The biggest contributors were Matimba, Kendal, Matla and Lethabo, with to address underlying plant challenges, such as the ash plant and boilers. deteriorating plant performance and system constraints remaining the Due to these challenges, the Kendal units continue to operate in non- greatest contributing factors, with stations operating in non-compliance in compliance with emission limits for extended periods. Where necessary, order to meet demand and limit the level of loadshedding required. the station will review and update the existing emission recovery plan. Following the failure of the west chimney stack at Kusile in Despite the ongoing challenges, there has been a general decrease in the October 2022, the Department of Forestry, Fisheries and the Matimba exceeded its daily limit 1 174 times of which 886 were classified level of emissions during the year, which is a positive development. Environment (DFFE) authorised Eskom in June 2023 to construct as non-compliant, caused by ashing backlogs that ultimately affect emissions temporary stacks to operate units until the permanent stack performance. An improvement was noted later in the year due to recovery In the Kendal air quality criminal case regarding the station’s alleged AEL can be constructed. The temporary stack structures were non-compliance, Eskom appeared in court on 1 November 2023 and actions being implemented. Kendal recorded 971 exceedances of which completed ahead of time, and Unit 3 was brought back to service 742 were non-compliant, primarily due to dust handling plant challenges, pleaded not guilty to three of the four counts. After initial administrative on 30 September 2023, followed by Unit 1 on 16 October 2023, discussions, the matter was adjourned until 18 to 20 March 2024, at which which cause the electrostatic precipitators to operate at reduced efficiency, thereby alleviating pressure on the power system. Unit 2 returned resulting in more particulate matter being emitted. Matla recorded 613 time the state began to present its case. Thereafter, the matter was to service on 28 November 2023. It is envisaged that permanent exceedances of which 409 were non-compliant, with poor coal quality postponed again until 18 to 22 November 2024 for further argument. The matter was heard in November 2024 and the State presented its repairs to the west stack will be completed by March 2025. being the main contributor to these exceedances. case. The matter has been postponed to January 2025. The limited In June 2023, we received the necessary approvals from DFFE and hearing dates and prolonged periods between hearings are due to the By year end, 16 units were operating in non-compliance with average the Nkangala District to operate the temporary stacks at increased court’s caseload. monthly emission limits (2023: 13), placing 9 045MW at risk of censure sulphur dioxide emissions levels while repairs to the west stack or closure by the authorities (2023: 7 691MW). The main contributors are underway. This was appealed by the Centre for Environmental Air quality offset programmes were Kendal, Matla, Lethabo, Matimba and Kriel. Some notable reasons We are undertaking an air quality offset programme to align to DFFE’s Rights on behalf of several organisations and neighbouring for operating in non-compliance were malfunctions at the dust handling call for emission reduction efforts in response to power generation landowners. The then Minister of DFFE upheld the positive decision plant affecting the performance of the electrostatic precipitators and flue impacts. The programme aims to reduce particulate matter emissions in September 2023, with the Nkangala District Municipality accepting gas conditioning (SO3) plant, as well as excessive emission exceedances in communities adjacent to some of our coal-fired power stations by the Minister’s decision a few days later. This means that the station during unit start-ups. improving ambient air quality and indoor thermal comfort, through can legally operate subject to conditions which it must comply with. insulating homes with ceilings, switching households from coal to MINIMUM EMISSION STANDARDS To date, no non-compliance with the SO2 stack limits or SO2 electricity and liquid petroleum gas, and addressing the burning of waste. South Africa’s Minimum Emission Standards (MES), first published in Our goal is to have a comprehensive approach to cleaner energy which ambient standards has occurred while operating the temporary stacks. We continue to implement the necessary monitoring 2013 and amended in 2018, set out emission limits that require Eskom to includes reducing harmful indoor emissions and create a cleaner, healthier reduce gaseous emissions of sulphur dioxide and nitrogen oxides, as well as environment for communities living near our power stations. activities as committed to the authorities. particulate matter. The objective is to protect people and the environment We are making good progress on the various projects under this programme. by providing reasonable measures for the prevention of pollution and ecological degradation and to ensure ecologically sustainable development The air quality offset programme in KwaZamokuhle near Hendrina NOx emission limits while promoting justifiable economic and social development. ended in October 2024, with 3 300 out of a planned 3 500 interventions There have been 31 exceedances of NOx limits recorded by coal-fired completed. At Ezamokuhle near Majuba, the project concluded in power stations during the year (2023: none). Eskom applied to DFFE in August 2020 for suspension, alternative limits September 2024, with 2 086 out of a planned 2 100 houses having been and/or postponement under the MES, based on an internally approved completed. In the Sharpeville area, all six waste clean-ups have now been COMPLIANCE WITH ATMOSPHERIC EMISSION LICENCES Emission Reduction Plan, which defined which stations would have completed. Atmospheric emissions include any emissions that result in air pollution, emission reduction technology installed and when. The decision by including particulate and gaseous emissions. We are allowed to emit the then Minister of DFFE in November 2021 would, if implemented, Planning and contracting for further phases of the programme is atmospheric pollutants within certain limits, based on atmospheric have resulted in the closure of power stations and an immediate loss of underway. Funding for partially implementing phase 2 of the project emission licences (AELs) issued to power stations by the authorities. was obtained, with an initial focus on two settlements near Tutuka capacity of 16 000MW and a further 10 000MW after 2025, a situation and Kendal. For Sivukile near Tutuka, a tender has been awarded to Coal-fired stations continue to operate in general compliance with which would be untenable for the country as a whole. In response, complete 1 160 houses by June 2025. For Phola near Kendal, the aim is to emission limits in their AELs, although non-compliance with these limits we submitted an appeal in December 2021 for those stations that complete 6 073 houses by August 2027. occurs periodically and are reported to the authorities as required. Our received unfavourable decisions, requesting the Minister to consider our AELs require us to report emergency incidents (referred to as section 30 motivation for a balanced and sustainable way forward. In total, 36 000 households across Mpumalanga have been identified for incidents under the National Environmental Management Act, 1998 participation in the Eskom-funded programme by 2028. In March 2022, the Minister agreed to invoke a consultative process or NEMA) to the authorities. A total of 18 section 30 incidents were in accordance with the provisions of section 3A of the National reported during the year (2023: 71). 86 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued Environmental Management Act, allowing all appellants, stakeholders applications granted by the then Department of Environmental Affairs. A total of 30 water-related legal contravention incidents were registered and interested and affected parties to participate. The Minister also Full compliance with the new plant standards was estimated to cost in during the year due to non-compliance with water use licences established a National Environmental Consultative and Advisory Forum the region of approximately R340 billion, which Eskom and the country issued to our power stations under the National Water Act, 1998 to review the MES decisions and appeals, and to make recommendations cannot afford, given our poor financial performance, substantial debt (2023: 58). Focused monitoring of the effective implementation of on the matter, after consultation with a range of stakeholders. We burden and reliance on Government support, together with the lack of water management action plans, both at power station level and by the engaged extensively with the forum during the process. appetite for funding of coal-based technologies. Generation Environmental Compliance Steering Committee, have not yet led to a significant improvement compared to the previous financial year, Based on our initiatives, we requested legal indulgence from full Our Emission Reduction Plan focuses on the reduction of particulate despite some improvement being recorded. MES compliance; a fleet approach to emissions load reduction; and matter at seven power stations (Kendal, Matimba, Lethabo, Tutuka, Duvha, consideration of various other factors, such as our Just Energy Transition Matla and Kriel); nitrogen oxide reduction projects at three stations SUPPORTING BIODIVERSITY (JET) strategy, ambient air quality and other contributors to health (Majuba, Lethabo and Tutuka); and sulphur dioxide reduction at Medupi Our activities in the generation, transmission and distribution of impacts, water use, increased production of waste, funding constraints, and Kusile. We will also continue to implement the air quality offset electricity impact biodiversity and are also impacted thereby. Therefore, security of supply, and the tariff impact of full compliance. programme in communities in the vicinity of our coal-fired power stations. we consider biodiversity as a material impact that requires management and focus. The forum undertook public consultations for all stations and submitted Work continues to implement the emission reduction projects to its recommendations to the Minister on 8 March 2024; she announced improve compliance to the limits set out in our power stations’ her decision on 22 May 2024; the decision was generally favourable to the atmospheric emission licences, and we are seeing positive progress. continued operation of Eskom’s coal-fired power stations. MANAGING WATER CONSUMPTION In relation to the power stations that are to close by 2030 – Hendrina, As a strategic water user, we receive water supply at the highest level Grootvlei, Arnot, Camden and Kriel – our request for suspension of the of assurance over the life of our power stations. Given the criticality of MES limits has been granted; this affects around 10 000MW installed water to our generation operations and the significant quantities of water capacity. This allows these stations to continue to operate at emission we consume, we will drive several priorities under our Water Efficiency levels achievable in terms of the installed emission reduction technologies. Plan, including: We have been directed to submit decommissioning plans within • Securing and maintaining a high assurance of water supply for 12 months of the decision. Work to develop these plans is underway. electricity generation For power stations operating beyond 2030, namely Matla, Duvha, • Maintaining high water-use efficiency across all power stations Tutuka, Kendal, Lethabo, Majuba, Matimba and Medupi (affecting • Achieving our intent of zero liquid effluent discharge around 30 000MW installed capacity), we have been directed to • Ensuring legal compliance with water legislation submit an application in terms of section 59 of NEMAQA for an • Managing water supply from power stations and water supply exemption in respect of each of these facilities from the provisions of infrastructure to third party water users the Act within 60 days of the issuance of the decision. We requested • Supporting the Just Energy Transition and continued power station until 31 March 2025 to submit the exemption application for these operations beyond 2030 stations; DFFE granted an extension until 10 December 2024. We have • Engaging relevant stakeholders in support of our water plans assessed several alternatives and published draft exemption reports for public comment. Public participation meetings were conducted Power stations have developed individual water management action plans in November 2024 and the exemption application was submitted in in response to the strategic Water Efficiency Plan. December 2024. SPECIFIC WATER CONSUMPTION These stations will continue to operate at existing emission levels as set Water performance of 1.43ℓ/kWh sent out has deteriorated slightly since out in their atmospheric emission licences until final decisions on the the prior year (2023: 1.39ℓ/kWh sent out). Water performance across exemption applications are received. the fleet of coal-fired power stations was negatively affected by low load factors and poor water management practices linked to operational Emission reduction projects challenges. These include dam overflows and leaks at power stations, In the past, we committed to retrofitting several power stations with as well as high raw and demineralised water usage. Due to system emission reduction technologies, such as fabric filter plant (FFP), low capacity constraints, there is limited opportunity to schedule outages to NOx burners and/or FGD, to reduce emissions under postponement implement corrective measures. 87 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued LAND MANAGEMENT and escarpment forest which hosts several threatened species, including REDUCING ENVIRONMENTAL LEGAL CONTRAVENTIONS We have integrated responsible land and biodiversity management the critically endangered white-winged flufftail, wattled crane, bearded A total of 68 environmental legal contravention incidents were recorded practices to minimise the impact of our activities on ecosystems and vulture and white-backed vulture. The declaration of the reserve with the reasons indicated below (2023: 105). All the incidents occurred to enhance ecosystem services. We manage nature reserves and other contributes directly towards environmental sustainability and meeting the at coal-fired power stations (2023: 97). land by implementing sustainable biodiversity conservation initiatives. United Nations Sustainable Development Goals. 1 3 We also implement alien invasion management plans to prioritise the protection of natural habitats, wildlife species and ecosystems in our Eskom also manages other land under conservation practices, such as that 30 areas of responsibility. Additionally, we implement biodiversity offsets at Thyspunt, Bantamsklip, Grootvallei, Majuba and Sere. as necessary. These mitigation interventions are often undertaken in IMPACT ON RED DATA BIRDS collaborations with conservation organisations, local communities and 58 We monitor our impact on biodiversity through, among others, red other stakeholders. data bird mortalities. We continue to implement proactive management 2024 2023 Eskom has formally declared three nature reserves at Koeberg Nuclear interventions, such as: 37 Power Station, Ingula Pumped Storage Station and Majuba Power Station, • Implementing proactive bird mitigation programmes on high-risk to protect South Africa’s biodiversity and to sustain South Africa’s natural power lines biodiversity heritage: • Installing bird diverters 44 • Implementing recommendations from investigations undertaken on The primary drive for proclaiming the Koeberg Nature Reserve was red data bird mortalities to support the operation of Koeberg Nuclear Power Station while Water Air quality Waste conserving the natural habitat, thereby preserving land for future • Redesigning power line structures to bird-friendly design based on scientific studies Environmental impact assessments development as well as providing a buffer area surrounding the nuclear station. The nature reserve incorporates a mosaic of environments • Research work through our Research, Testing and Development (habitats) which include small seasonal wetlands, coastal dune fields, Cape (RT&D) Department Of the environmental legal contravention incidents, seven were escalated Flats Dune Strandveld, Atlantis Sand Fynbos, an inter-tidal zone as well as as being a result of significant failure of business systems (2023: 10). Of In addition, we perform environmental impact assessments, habitat two aquifers: the Primary Sandveld Aquifer and the Malmesbury Aquifer. these, three were due to particulate matter emission exceedances, and restoration and conservation initiatives to scientifically assess biodiversity the rest were due to water-related matters at coal-fired power stations. The Ingula Nature Reserve is South Africa’s 27th Ramsar site to be added risks and protect vulnerable species. Nevertheless, red data mortalities to the List of Wetlands of International Importance. It was declared to were higher during the year, 258 (2023: 170), although we acknowledge Eskom’s Environmental Steering Committee and the Generation protect the Drakensberg’s high altitude grassland ecosystem, wetlands that the actual number may be higher than this. We continuously research Environmental Compliance Steering Committee oversee the more effective mitigation measures. response to findings from compliance notices from the authorities. 88 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued Furthermore, the Social, Ethics and Sustainability Committee closely RESPONDING TO CLIMATE CHANGE monitors management’s progress on fulfilling commitments to achieve  efer to notes 4.5 and 27 in the financial statements for more AFS R Climate change refers to long-term shifts in global temperatures and information environmental compliance. To meet environmental compliance weather patterns. This is largely driven by human activities such as obligations and exercise our duty of care towards the environment, we burning fossil fuels, which release greenhouse gases (GHGs) into the have adopted an integrated approach which prioritises (i) governance; INVESTING IN RENEWABLE ENERGY atmosphere. These gases trap heat and cause the planet to warm up, (ii) performance management; (iii) skills development; and (iv) detailed Our direct investment in renewable generating capacity remains modest, leading to effects like melting ice caps, rising sea levels, changing rainfall operational plans to address the risks and root causes of incidents of non- with six hydroelectric stations and one wind facility. Through the Just pattens, increased evaporation and more extreme weather events. compliance relating to relative particulate emissions, water use and the Energy Transition, we aim to introduce more renewable capacity, mainly Without intervention, climate change will endanger the lives and release of polluted water from power stations. through repowering and repurposing of our end-of-life stations, to reach livelihoods of hundreds of millions of people around the world and have a our long-term objective of attaining net zero emissions by 2050, with an devastating impact on ecosystems. Legislation required equipment and material containing polychlorinated increase in sustainable jobs. biphenyls (PCBs) to be phased out by 31 December 2023. Generation As explained earlier, coal and gas-fired power stations contribute and Distribution concluded their processes for the removal of the last greenhouse gases to the atmosphere. In South Africa, electricity remaining PCB-contaminated transformers; the disposal certificates were IR F or information on the capacity of our power stations and a breakdown of generation currently contributes around 41% of the national GHG received in December 2023. The rest of the business had already phased capacity supplied by IPPs, refer to pages 118 to 119 emissions, which is a significant decrease from the early 2000s. One of out PCB-containing equipment by the previous financial year. A final the key initiatives being driven worldwide is phasing out unabated coal- external audit will be conducted during the 2025 financial year in line During the year, Eskom’s Sere Wind Farm contributed 329GWh to the fired electricity production. In South Africa, the speed at which coal-fired with the DFFE approval to confirm that we have achieved the legislated national grid (2023: 214GWh), at an average load factor of 35.81% (2023: production can be phased out depends on the rate at which replacement phase-out date. 23.54%), which aligns to expectations for wind-based renewable plant. It low-carbon generation capacity can be rolled out, together with the recorded an average availability factor of 97.40% (2023: 67.48%). necessary funding, regulations, skills and logistics. IR Detail on the disposal of ash, asbestos, PCB-containing material, as well We also purchase renewable energy from IPPs, with the main sources International support for South Africa’s JET Investment Plan has increased as used nuclear fuel and nuclear waste is set out in the technical statistical being wind and solar power, with small amounts supplied by biomass, from $8.5 billion pledged at COP26 to $11.2 billion. table on page 115 landfill gas and small hydro technologies. Renewable IPPs contributed 17 851GWh during the year (2023: 16 859GWh), which constitutes around OUTCOMES OF COP28 PROVISIONS FOR ENVIRONMENTAL RESTORATION AND 8.5% of energy available for distribution for the year. Furthermore, most of COP28 had critical outcomes for the Just Energy Transition. The current REHABILITATION the imported power comes from hydro power supplied by Cahora Bassa. energy trilemma informs the decision for our transition to occur at a pace We provide for the environmental obligations related to the and scale the country can afford, as our focus is on building an energy decommissioning of: In aggregate, 13.1% of the power supplied during the year was from system that is secure, accessible and sustainable for all South Africans. • Nuclear plant and rehabilitation of the associated land, as well as renewable sources in the form of solar, wind and hydro, with 82.5% coming from coal and diesel, and 3.9% from nuclear (2023: 12.7%, 82.5% and 4.6% The technical report of the first Global Stocktake (GST) noted that managing spent nuclear fuel assemblies and radioactive waste collectively the world is not on track to meet the commitments under the respectively). The balance of 0.5% was from other sources (2023: 0.2%). • Other generating plant and rehabilitation of the associated land Paris Agreement and that the temperature goal is at risk of not being met. • Cost-plus mines, where we have a contractual or constructive obligation We have made available land for lease in Mpumalanga, where grid access is In the political talks on the first GST, there was collective agreement from to reimburse coal suppliers. It covers the estimated closure cost, available, to allow project developers to build additional renewable energy nearly 200 countries for the first time to move away from fossil fuels, “in including pollution control and rehabilitation of the associated land capacity. In Phase 1, land rental agreements were signed with five developers a just, orderly and equitable manner.” This is an important political signal for 17 parcels of land, with the potential to deliver approximately 1 800MW about the significant transition that lies ahead. The GST called for tripling We have raised the following provisions relating to environmental of power close to Majuba and Tutuka power stations. Developers are the global capacity of renewable energy and doubling the annual rate of rehabilitation and restoration: responsible for all approvals including environmental approvals, land use energy efficiency improvements before 2030, together with phasing out rezoning and servitude acquisitions. These processes are underway, and we inefficient subsidies for fossil fuels that do not address energy poverty or Actual Actual Actual are working with the developers and Government to address any constraints facilitate just transitions, as soon as feasible, although there was ambiguity R million 2024 2023 2022 around the development of new coal plants. or delays. On our side, the focus is on finalising the grid connection Power station-related environmental applications. We also intend developing renewable capacity on our own land 23 679 21 824 18 269 South Africa emphasised that climate ambition must be balanced across restoration – nuclear plant or in partnership with external parties. Power station-related environmental mitigation, adaptation and means of implementation. Thus, a Global Goal 16 086 15 863 16 293 on Adaptation was adopted in which measurable, time-bound targets restoration – other generating plant Mine-related closure, pollution control and thematic areas for adaptation are included to encourage countries to 13 280 13 113 15 303 accelerate their adaptation plans. and rehabilitation Total 53 045 50 800 49 865 89 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued SOUTH AFRICA’S RESPONSE TO CLIMATE CHANGE economy. Through collaboration with stakeholders and continuous CLIMATE RESILIENCE AND ADAPTATION As a signatory to the Paris Agreement, South Africa has submitted an innovation, we are dedicated to creating a sustainable energy future for Due to our unique geography, South Africa is expected to experience updated Nationally Determined Contribution (NDC) to the United South Africa while mitigating our environmental impact and contributing approximately double the rate of warming compared to the global Nations Framework Convention on Climate Change (UNFCCC), aiming to global climate goals. average. To remain resilient, we need to conduct climate risk assessments, for a pathway based on an average temperature increase of well below 2°C implement adaptation measures and incorporate climate considerations more than pre-industrial levels. The NDC commits the country to limiting We have developed a decarbonisation strategy with an aspiration into our long-term planning. We have engaged the Council for Scientific its GHG emissions to between 398MtCO2e and 510MtCO2e by 2025, and to achieve net zero emissions by 2050. The strategy is multifaceted, and Industrial Research (CSIR) to undertake downscaled climate between 350MtCO2e and 420MtCO2e by 2030. This is considered a fair addressing mitigation through cleaner energy adoption and emissions projections for future time periods to understand what physical changes contribution by South Africa to the global effort. Signatories are further reduction, adaptation through resilience-building measures and in the climate to expect under different levels of mitigation. For instance, expected to provide updated NDCs during 2025 with a commitment for innovation through research and collaboration. transmission lines are prone to damage during extreme weather. Snow 2035. In order to ensure the country meets its international obligations, and ice, wildfires and extreme wind can damage above-ground power By addressing both mitigation and adaptation, we aim to ensure a South Africa has implemented several pieces of domestic legislation. lines and transmission towers. sustainable and reliable energy future for South Africa, supporting CARBON TAX economic growth and social development while minimising our It is imperative for our line divisions and subsidiaries to have climate change Under the Carbon Tax Act, 2019 as amended, carbon tax has been environmental impact. Our comprehensive approach to climate change adaptation plans in place. We continue to ensure that physical climate and levied on GHG emissions since 1 June 2019, to encourage consumers to demonstrates our commitment to a resilient and sustainable future. weather risks are addressed through the development, implementation, reduce consumption of carbon-intensive products and shift the country monitoring and reviewing of divisional climate change adaptation plans. Under the Just Energy Transition, our older, less efficient coal-fired power onto a low-carbon pathway. However, generators of electricity from plants will be gradually decommissioned as new low-carbon capacity is fossil fuel are allowed a deduction equal to the environmental levy paid added to the grid to maintain security of electricity supply. The intention and the renewable energy premium incurred through renewable energy is to deploy new renewables at existing sites in the interim, to support Generation Division has a mature plan in place covering all coal- purchases in the same tax period. local communities and provide Eskom employees and stakeholders fired, nuclear and peaking power stations and related business The Carbon Tax Act has been amended to allow Generation’s GHG with valuable experience with these technologies. The plan aims to units. All risks have been assessed, classified and rated, and fully emitting activities (code 1A1a) to continue to claim the renewable energy mitigate the socio-economic impacts that communities would otherwise integrated through our integrated risk management process into premium from RE-IPP contracts ceded to the NTCSA. experience if the older stations simply shut down. We are keeping emergency and disaster management plans as well as business an eye on international developments in carbon capture and storage continuity plans. Eskom Rotek Industries is undergoing a review of The deduction of the environmental levy and renewable premium against technologies. These could potentially mitigate the environmental impact its approved adaptation plan. Due to ERI’s footprint overlapping the 1A1a liability has been extended to 31 December 2025, with the first of continued coal use during the transition period, although both the cost with Generation Division, most risks are covered through the carbon tax liability to Eskom arising in the 2026 financial year. Thereafter, and the long lead times may prove insurmountable. Generation adaption plan. Flooding risks and associated treatment the carbon tax is expected to be passed through to the electricity plans are in place at operational level depending on site conditions. consumer given that the price of electricity is regulated. Current forecasts  efer to “Our role in communities – Just Energy Transition” from page 103 IR R are that the carbon tax liability will add around R20 billion per year to the NTCSA finalised its climate change plan during the year under for more information on our JET initiatives, including the repowering and revenue requirement. review, covering three pillars: i) addressing GHG emissions; ii) repurposing of Komati Power Station anticipating and adapting to climate change; and iii) transforming POLLUTION PREVENTION PLANS operations in support of the JET and contributing to sustainable Eskom has an approved pollution prevention plan for the period 2021 We align our investment and operational plans with the Integrated development. The plan has been formally approved. to 2025. We submitted our 2023 annual progress report for the Resource Plan (IRP), which outlines the country’s future electricity implementation of the plan to DFFE by the deadline of 31 March 2024. generation mix. The draft IRP 2023 includes targets for renewable energy Distribution Division’s adaptation plan has also been approved. This progress report highlighted that planned station shutdown dates deployment and the reduction in coal as part of the energy mix, guiding were under review because of the shortage of generation capacity and Eskom’s strategic decisions. Mainly through IPPs, a significant amount of the resulting loadshedding. Existing pollution prevention plans will become renewable energy capacity has already been added to the grid, contributing These plans provide a high-level overview of the climate risks and official mitigation plans under the new Climate Change Act, 2024. to a cleaner energy mix and reducing the reliance on fossil fuels. approaches to building increased resilience and adaptive capacity across the divisions. They are complemented by more detailed ESKOM’S RESPONSE TO CLIMATE CHANGE actions and initiatives at local site level to identify exposure of assets As a significant emitter of GHGs, we acknowledge our role in the climate and infrastructure, as well as vulnerabilities and the risks posed to change challenge and are committed to reducing our carbon footprint. the sustainability of operations, and to ensure that measures are We remain steadfast in our commitment to sustainability and combatting implemented to manage these risks. A draft climate adaptation climate change. By embracing low-carbon energy sources and storage, dashboard has been developed and is under review. This dashboard will as well as enhancing energy efficiency and fostering resilience, we are be used in the 2025 financial year to report progress on execution of the positioning ourselves as a leader in the transition towards a low-carbon divisional adaptation plans. 90 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued CLIMATE RISKS AND OPPORTUNITIES We recognise that climate change is not only an environmental issue, but We face climate risks stemming not only from the projected physical changes in climate (physical risks), but also from external actions taken to respond to also a business issue with far-reaching effects on the electricity grid. Our climate change (transition risks) that arise as the world tries to limit the global average temperature increase. However, there are also significant opportunities operations – from generation, transmission and distribution activities – to for Eskom to participate in a Just Energy Transition where we strive to achieve net zero carbon emissions by 2050 with a net increase in sustainable jobs. end-user demand, are at risk of disruption due to climate-related risks. The impacts of these risks are location- and sector-dependent. Extreme climate and weather events Damage infrastructure Disruption of electricity supply Climate change adaptation and building resilience in the electricity sector are essential for ensuring energy security, mitigating economic risks, protecting public health and safety, and facilitating the transition to a low-carbon future. Changing environmental conditions Risks to water availability Increased temperatures affecting plant efficiency During this process, it is critical that we continue to engage with stakeholders and legislators to coordinate efforts to respond to climate change effectively and circumspectly to balance the energy trilemma. Increased energy demand Cooling during heatwaves and changing consumption patterns We continue to support climate change adaptation research and the integration of climate change impacts to support climate resilience operations Supply chain disruptions Impact on resources and long-term planning initiatives. We are committed to partnering with research institutions locally and internationally with the aim of developing capacity and contributing to scientific knowledge in the field of climate change Transitioning to low carbon future Building resilience in infrastructure to support the JET science, climate impacts and overall adaptation research and initiatives. Economic impacts Businesses, industries, communities, local and global carbon pricing initiatives SR Refer to “Our climate change performance” in the sustainability report for more on our response to climate change Public health and safety Reliable supply of electricity for emergency services, Health care facilities and vulnerable populations METRICS AND TARGETS Aligned with the goals of the Paris Agreement, we continue to drive efforts to mitigate and adapt to climate change. Performance is measured through Through the development of adaptation plans we have identified physical climate risks that could affect the operation of our generation plant and network various metrics, including GHG emissions data and legislative compliance. infrastructure. These types of risks have already been experienced on occasion, such as the floods in KwaZulu-Natal in 2022 where transmission towers were Eskom reports on many additional environmental and operational aspects damaged or washed away. An extreme storm in the Central Karoo in February 2024 resulted in damage to distribution lines, with power to several nearby that either have co-benefits or contribute to resilience. towns being disrupted for 12 days. We recognise that extreme weather events are likely to increase in frequency and severity as climate change advances. GHG emissions Rising temperatures and extreme heat: Loss of cooling capacity; reduced output and/or forced plant outages, conductor sag, line trips, increased We continue to submit an annual GHG report to DFFE based on their raw water temperature, exceedance of equipment design thresholds, increased fire risk, evaporation, logistics and supply chain management technical guidelines for scope 1 emissions. These are based on the 2006 impacts, workforce exposure and impacts, increasing energy demand Intergovernmental Panel on Climate Change (IPCC) GHG Guidelines and 2019 IPCC Refinements. Extreme cold snaps: Contraction of lines and ice loading, contraction oil in transformers, efficiency of cooling towers due to freezing, mist/ moisture affecting network insulation especially in polluted environments, snow and ice affect conductors and insulators Carbon footprint We calculated our annual carbon footprint (including scope 2 and 3 Extreme precipitation events/wet spells: Flooding, overflow of water storage dams, impact on ash dam design integrity, access to sites, emissions) expressed in tons of carbon dioxide equivalent (tCO2e) interruption to water supply, intermittent supply of coal, erosion impacts on tower foundations, water pump houses, towers washed away for the 2023 calendar year, using the same methodology as 2022. The footprint was calculated in line with the globally recognised GHG Protocol: Drought: Water availability, impact on operations and plant, vegetation management plans A Corporate Accounting and Reporting Standard. Did you know? Increased wind speeds: Impact building, towers, lines, tripping of wind turbines (load reduction), increased dust generation and erosion (Ash The carbon footprint calculated based on the GHG Protocol dams), loose debris, containerised buildings guidelines may involve different scopes, thresholds and assumptions than DFFE’s regulated reporting requirements. This means that while our results provide valuable insights, direct comparisons with Wildfires: impacts on transmission and distribution lines, damage to infrastructure, insulator flash overs, coal conveyers regulated data may not be possible. 91 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our interaction with the environment continued The results of the carbon footprint study for the 2023 calendar year, compared There has been a notable decrease in emissions from Eskom’s stationary FUTURE FOCUS AREAS to the results for the two previous years, are presented in the table below. combustion. This is attributed to the reduced output from the coal-fired • Extending cost-plus coal contracts to match power stations’ useful lives to Stationary combustion of fossil fuels, including coal and diesel consumption, fleet as a result of low plant availability. Emissions in other categories optimise the cost of coal and ensure security of coal supply from dedicated coal accounted for more than 97% of Eskom’s greenhouse gas emissions. have increased, due to improved reporting and data collation. The GHG resources, including reinvesting in cost-plus mines to enable contractual supply Protocol recommends that subsidiaries should report their emissions with • Utilising dedicated coal reserves for supply to stations without cost-plus 2023 2022 2021 the parent company, and we have included ERI’s scope 1 and 3 emissions contracts GHG emissions by source, calendar calendar calendar for 2023 reporting purposes. • Extending existing long-term fixed-price coal contracts for designated power tCO2e year year year stations as well as identifying and pursuing options to supply other power As in the prior year, we have accounted for electricity purchased from stations, rather than procuring on the short-term market Scope 1 IPPs as scope 3 emissions, because it is not produced by Eskom. However, Stationary combustion2 183 904 930 193 157 386 207 230 321 • Utilising the open tender process to source uncontracted coal for the the purchased electricity being transmitted and distributed along our remaining life of power stations Eskom fleet vehicles 129 543 71 623 78 138 infrastructure incurs some losses before reaching the end user. These Fugitive emissions 65 712 52 841 • Striving to move coal as economically as possible, leaning towards a tied 85 762 losses are reported as scope 2 emissions. colliery model to deliver coal by conveyor, with rail and road transportation Waste disposal 3 189 81 972 3 366 being less preferred options Non-combustion product use 10 925 9 689 3 As the highest emitter of CO2 on the African continent, we acknowledge • Managing the environmental rehabilitation and closure liabilities at cost-plus our carbon footprint and are developing strategies to ensure a Just Scope 2 and defunct coal mines supplying our coal-fired stations Energy Transition to decarbonise, onboard low-carbon alternatives and • Negotiating and concluding water supply agreements with DWS for the Electricity and heat purchased3, 4 131 899 85 171 – leverage the shutting down of old coal-fired power stations, which will supply of raw water to the bulk of our coal-fired power stations result in reduced emissions. The current GHG emission monitoring Scope 3 • Monitoring and ensuring the Mokolo Crocodile Water Augmentation Project enables us to set attainable targets to achieve net zero emissions by 2050 Electricity purchased from IPPs3 494 263 – Phase 2A is implemented timeously to meet Medupi’s FGD retrofit water 765 429 and to remain a sustainable business. Although this is an ambitious goal, it Coal delivery to site – road requirements and to ensure long-term water security to Matimba and Medupi 4 900 752 252 743 will benefit the country and the continent at large. and rail 3 717 648 power stations Generation Division waste3 2 371 35 – CDP disclosure • Engaging and partnering with key stakeholders to manage the water supply Business travel – use of We continue to voluntarily disclose our climate change performance on the and quality risks to our power stations 8 122 8 598 6 003 Carbon Disclosure Project (CDP), a global platform for investors, companies, • Ensuring improved environmental performance at power stations, with employee vehicles Business travel – air travel 11 129 3 621 937 cities, states and regions to manage their environmental impacts. The CDP specific focus on water use, emissions and environmental legal contraventions Business travel – vehicle rental 627 1 216 provides the global financial sector with the most complete source of to improve legal compliance and reduce harm to the environment and society 489 self-reported corporate environmental data from more than 7 000 of the • Ensuring compliance with the conditions related to the MES appeal decision Total5 188 771 436 198 879 449 207 625 568 world’s largest companies. It considers the impact and management of issues by DFFE related to climate change, water security and deforestation. The information • Implementing both reactive and proactive bird mitigation projects on existing 1. Years refer to calendar years, and not financial years as indicated elsewhere in the report. assists investors, corporations and regulators in making informed decisions on power lines 2. For coal, an Eskom-specific annual weighted average net calorific value of 0.01901TJ/ ton fuel was used based on the actual measured value for 2023. investing in particular industries, sectors and countries. • Expediting the closure of non-compliance with licences and permits and 3. Not calculated in 2021 due to the limitations of the tool used at the time. accelerating responses to communication from authorities 4. As electricity generation is Eskom’s main activity, scope 2 emissions are in principle accounted for as scope 1 direct emissions under the GHG Protocol. However, since 2022 we have included estimated energy losses on the transmission and distribution grids relating to electricity purchased from IPPs as scope 2. 5. Due to different scopes and input assumptions, the results are not directly comparable with our CO2 emissions reported in the table on page 115. 92 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people Our human capital covers our employees and contractors and their Number of employees Gross employee benefit expense Training spend competencies, capabilities and experience. Our people are critical to successfully achieving our mandate and strategic objectives. We continue to 3%  8%  27%  focus on transforming our workforce in terms of racial, gender and disability representation as well as instilling a high-performance ethical culture. To to 40 625 to build capacity to R37.1 billion to R1.4 billion deliver on our mandate and objectives, we require effective employee 2024 40 625 2024 37.1 2024 1.4 engagement and performance management, as well as enhancing our 2023 34.3 2023 1.1 employee value proposition to improve employee productivity and morale 2023 39 601 and, ultimately, ensure consistent delivery against objectives. 2022 40 421 2022 35.0 2022 0.9 We are identifying skills gaps and then closing those gaps by training our people, maintaining a diversified learner pipeline and enabling talent development opportunities, as well as recruiting where necessary to supplement skills. We also need to retain the talent that we have and Number of pipeline learners ACI representation of Female representation improved to recognise and reward their efforts in an appropriate manner. 33%  90.1% 36.2% We remain committed to our value of Zero Harm by promoting safety at year end excellence in all areas. We collaborate with organised labour, employees to 2 086 2024 36.2 and contractors on initiatives that create a safe working environment and 2024 2 086 2024 90.1 2023 35.4 mitigate safety risks. 2023 2023 88.9 2022 34.1 1 568 OUR WORKFORCE 2022 1 238 2022 87.8 The Human Capital and Remuneration Committee (HCRC) confirmed four strategic oversight priorities which are linked directly to the thrusts of the People Plan. High-performance ethical culture Concluded a Achieved good Disappointing three-year progress safety performance, • • Culture transformation and change management Performance and productivity with five fatalities and an increase in • Leadership development and continuity collective bargaining agreement in closing gaps identified by the prior year • Accountability and consequence management occupational diseases and lost-time to ensure organisational stability skills audit incidents Skills and capabilities • Training and development • Closing of skills gaps Be an employer of choice • Remuneration, rewards and other offerings to attract and retain the right talent • Diversity, equity, inclusion and belonging • Employee wellbeing Future-fit organisation • Efficient, productive and agile workforce that delivers future-fit products and services 93 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people continued Our vision, mission and values are supported by our leadership brand pillars. We require legitimate and authentic leaders who individually and Change in group headcount collectively internalise, articulate and actively live the following leadership brand pillars. -17.3% 7 007 2.5% 6 797 6 625 5 474 5 731 5 083 2 637 13 747 37 765 36 124 35 151 34 690 34 518 17 011 4 104 2020 2021 2022 2023 2024 2027 Eskom ERI Transmission Distribution Generation For 2020 to 2024, Eskom refers to Eskom company, including Generation, Transmission and Distribution. For the 2027 target, Eskom refers only to Eskom Corporate, following the legal separation. For comparability, the combined headcount for Eskom Corporate, Generation, Transmission and Distribution is targeted at 37 499 in 2027. Divisional breakdown, % 5 474 (14%) 2 349 13 010 (6%) (32%) COMPOSITION OF OUR WORKFORCE Group headcount amounted to 40 625 employees at year end (2023: Did you know? 39 601), comprising 39 388 permanent and 1 237 fixed-term employees We are a proud contributor to Government’s Youth Employment 2024 (2023: 38 725 and 876, respectively). This represents an increase of Service (YES) programme, which provides work experience to previously unemployed black youth in entry-level and non- 879 1 024 for the year, mainly due to the recruitment of core and critical skills professional roles. At year end, 519 YES employees were receiving (2%) in Generation and ERI. 15 495 work experience in various roles across the organisation. (38%) 3 418 We recorded an attrition rate of 5.7% (2023: 6.7%), with 2 280 employee (8%) exits during the year. However, we replaced skills at a higher rate, with Generation Group capital Transmission 3 304 employees appointed from the external market, together with Our workforce plan is aimed at ensuring that current and future staffing levels are aligned to our strategic objectives. The plan was developed and Distribution Corporate ERI 3 062 internal hires, including promotions, to advance our people. implemented during the previous financial year and focuses on retaining core and critical skills, driving employment equity transformation targets Over 80% of our workforce is actively engaged in the crucial tasks of and meeting training and development needs. The workforce plan is also generating, transmitting and distributing electricity to our customers. As aligned with the strategic requirements of our three licensed businesses. our new build programme draws to a close, we are proactively upskilling, reskilling and redeploying employees to various areas within our business to avoid job losses. This ensures that our workforce remains versatile and adaptable, ready to meet the evolving needs of the future electricity industry while preserving employment opportunities for our valued employees. 94 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people continued Occupational level breakdown, % LEARNER PIPELINE Did you know? Our learner pipeline is aimed at addressing the demographic shift in the Top management We employ the 5B model used globally to address the skills and workforce by balancing the ageing workforce with a steady influx of new and senior <1 talent. Through our learner pipeline programme, we are strategically management competency gaps identified. The 5B model outlines five avenues for ensuring that we have the right skills to enable the business to positioning ourselves to meet future skills requirements. Over the next Middle management 17 operate efficiently: five years, we anticipate recruiting about 46% of our projected workforce and professionals growth needs from the learner pipeline and insourcing initiatives. This Buy: implementing recruitment and other sourcing processes such forward-thinking approach ensures that we have a steady stream of Skilled 54 as headhunting, crowdsourcing and fixed-term contracting talent equipped with the necessary skills and knowledge to drive our Build: internally building, growing and developing employees organisation forward, thereby enhancing our capacity for innovation and through training and development sustainable growth. Semi-skilled 27 Borrow: securing the assistance of internal or external industry experts, for example, through engineering, procurement and At year end, our learner pipeline represented 5.9% of the permanent Unskilled <1 construction contracts, so that the necessary talent is available Eskom company workforce, against a target of 2.5%. Artisan learners when needed for specific project-based work make up the biggest share of the learner pipeline, at around 31%. We have increased the total number of learners by 33% over the past year, DEVELOPING OUR WORKFORCE Bind: retaining our talent to reduce turnover of skills demonstrating our commitment to building a pipeline of skills for the LEARNING AND DEVELOPMENT Bounce: managing or letting go of employees who are not organisation. The dynamic shifts in the energy industry and our current operational performing or who are not fit for purpose challenges necessitate the upskilling and reskilling of our workforce. Learner pipeline, number of learners To address this need, we have established an upskilling and reskilling framework which, together with the insights obtained from our recent skills EAL is repositioning itself to support business to deliver the required 421 2 086 audit, will assist in addressing the skills and competency gaps identified. training as well as various competency areas identified, including technical We are focusing on establishing future-fit career paths, implementing training to address operational challenges within the line divisions. 222 redeployment strategies and delivering targeted training interventions to Furthermore, we will continue to drive and enable the development 422 address these gaps and ensure that our workforce remains agile, adaptable of leadership capabilities across the business through programmes and frameworks such as the existing Management Development Programme and equipped to thrive in a challenging and evolving environment. 367 (MDP) driven by the EAL Leadership Academy and the implementation Based on the results of our skills audit, we are prioritising interventions of the upskilling and reskilling framework. 654 across several proficiencies including technical and plant knowledge, To ensure leadership continuity, especially at top and senior management business acumen and financial management, and understanding the levels, we have established succession planning and talent development broader energy industry and associated regulations. Leadership and programmes. These initiatives are designed to identify and nurture future management capabilities are also being prioritised to build a strong leaders across the organisation. We are positioning the organisation to leadership pipeline going forward. While these areas are immediate Artisans Engineers Plant Technicians Non- Total sustain leadership excellence and adaptability in response to the evolving operators technical pipeline priorities to support the achievement of our turnaround objectives, our business landscape. learning and development interventions encompass several other skills and disciplines to ensure the continuous development of our workforce. Two new talent development programmes have been implemented to Excluding YES programme learners who are externally funded. strengthen our talent pools, build and retain leadership skills and improve A new welding centre has been established with the Eskom Academy succession planning and leadership continuity. The top talent programme of Learning (EAL) which will address the scarce skills requirements in is focused on general and executive management positions, while the welding and other artisanal disciplines and will feed associated initiatives millennial talent programme is aimed at middle and senior management like the containerised microgrids and solar PV installations with a regular positions. The first cohort of 35 candidates has completed the cohort of dedicated skills. programme. Furthermore, 62 executives, general and senior managers have taken up coaching relationships. We also recognise that the upskilling and reskilling of employees at ageing power stations, together with the training of beneficiaries from We have also partnered with several local and international institutions surrounding communities, is critical for enabling a just transition in line which provide external executive programmes aimed at management with our repowering and repurposing plans. We have established a development, technical and non-technical skills through multiple short training centre at Komati Power Station which is equipped with vocational programmes, certificates, postgraduate programmes and full-time training facilit ies. sponsored studies abroad. 95 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people continued FURTHER STUDIES Gender equity by level of employment, % Racial representation across the workforce We believe that investing in employee development is not merely an option, it is a strategic necessity. During the year, a total of 930 employees 2 945 1 343 were enrolled in further studies, of which 59% were women and 3% were (3%) (7%) persons with disabilities. Fields of study range from certificate programmes 4 015 to doctorates, with over two-thirds of these employees pursuing a bachelor’s (10%) 45.54 degree or higher qualification. This commitment to education and growth 44.38 42.52 41.64 41.10 42.03 42.34 underlines our dedication to fostering a diverse and skilled workforce. 36.54 31.12 30.69 27.27 TRANSFORMING OUR WORKFORCE 40 625 We are committed to transforming our organisation to better reflect 14.29 the demographics of South Africa through a more diverse and inclusive workforce, in line with our employment equity plan. The transformation Top Senior Middle Skilled Semi-skilled Unskilled 32 322 objectives of this plan are aligned to the expectations of our shareholder and (80%) the principles of the Employment Equity Act, 1998. Transformation initiatives manage- manage- manage- include enhancing employment equity through better representation ment ment ment and African White across all levels of employment, optimising learner management and professionals Coloured Indian fostering training and development programmes to advance talent from under-represented groups. We are actively cultivating an environment that Target Actual met target Actual did not meet target celebrates diversity and promotes inclusivity at every level of the organisation. Actual almost met target (within 5% threshold) Gender representation across the workforce Racial equity by level of employment, % Persons with disability by level of employment, % 14 706 (36%) 40 625 98.76 4.27 100.00 100.00 93.55 92.77 90.06 85.11 3.15 3.15 88.25 3.15 81.82 3.15 83.15 3.15 3.15 78.89 79.78 2.90 25 919 2.31 (64%) 1.21 Male Female Top Senior Middle manage- Skilled Semi-skilled Unskilled Top Senior Middle Skilled Semi-skilled Unskilled manage- manage- ment ment ment and The overall gender ratio of our workforce has improved slightly to 64% manage- manage- manage- ment ment ment professionals male and 36% female (2023: 65% and 35%), with the aim to achieve and 50:50 representation by 2030. Female representation in Exco remains a professionals Target Actual met target Actual did not meet target focus area, with four out of the 11 members at year end (including acting Actual almost met target (within 5% threshold) positions), being female. Further improvement in employment equity Target Actual met target Actual did not meet target performance is expected to be achieved through the implementation of Actual almost met target (within 5% threshold) Over the past year, there has been notable progress in improving racial learning and development programmes targeted at women, delivered and gender representation within senior management roles, although through partnerships with academic institutions. these remain below target. We have achieved significant progress in racial IR Our group and company employment equity performance at senior and gender representation within middle management and professionally management level, as well as at professional and middle management level, qualified positions, with both targets met for the year. Nevertheless, efforts is set out in the statistical tables from page 116 to enhance gender equity and promote representation of persons living with disabilities across all levels of employment remain areas of focus. 96 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people continued time in more than a decade that all parties have reached a collective We use the results of these surveys to track the success of Eskom’s culture Did you know? agreement during the negotiation process, which is testament to the transformation. Analysis of the survey results reveals that Eskom Guardians We commemorated 10 years since the establishment of the Eskom strengthening of partnerships with our trade unions. are observing an incremental shift in culture within their business areas and Women Advancement Programme, which aims to advance the among leadership as there is an upward trajectory across all three areas – Managerial employees receive a guaranteed package on a cost-to- employee engagement index, organisational culture index and employee development of women in leadership, ensure that women and girl company basis, which covers benefits such as medical aid, pension, dread value proposition index – relative to the previous year. children take up positions in technical roles and create a gender- disease cover, group life and death benefits. A 7% increase for managerial sensitive organisation where women across the spectrum are able employees was implemented from 1 October 2023, of which 4% was Our comprehensive EVP emphasises retention strategies that go to freely express their talents, and are afforded platforms and guaranteed for all managerial employees and the remaining 3% was beyond rewards and recognition. This entails providing market-aligned opportunities for unfettered growth. Eskom is a proud signatory of discretionary, to retain high performers and correct income differentials. remuneration packages; competitive leave, health and death benefits; the United Nations’ Women’s Empowerment Principles (UN WEPs). extensive development and training prospects, both locally and The Board has reimplemented a short-term incentive scheme for internationally; diverse career pathways; and experience in large-scale We are committed to fostering a conducive work environment employees in the 2025 financial year, to recognise and incentivise projects and cutting-edge technologies. Additionally, to promote and that champions gender equality across every aspect. We recognise excellence, deliver improved operational performance and ensure the facilitate employee wellbeing, we have adopted hybrid work practices, that without a gender-neutral organisation, our success and growth achievement of our turnaround plan. enabling eligible employees to work remotely with periodic on-site may be limited, thereby making this a strategic imperative. We will continue to make a deliberate effort to remove barriers and ensure requirements, based on operational demands. that women can thrive in an environment where everyone can IR E xecutive remuneration is discussed under “Governance and ethics – Remuneration of directors and executives” on page 51 We maintain our commitment to employee engagement through a range reach their full potential in leadership and technical roles. of channels, including leadership site visits, executive interviews and communications, as well as employee events aimed at fostering recognition ORGANISATIONAL EFFECTIVENESS and celebrating achievements throughout the organisation. We held a total We are dedicated to ensuring fair and inclusive representation of persons Our objective is to enhance organisational effectiveness and cultivate a of 138 leadership engagement sessions during the year to drive greater living with disabilities across every level of employment. Group disability strong sense of belonging and connectedness to Eskom by nurturing a awareness, accountability and alignment across the organisation. equity remained unchanged at 2.96%, with 1 201 employees with high-performance ethical culture, actively engaging with employees and disabilities at year end (2023: 1 171). While we have achieved the national providing a compelling employee value proposition (EVP). We conduct Internal communication platforms ensure that employees are informed target of 2% prescribed by the Department of Employment and Labour, an annual human capital organisational effectiveness survey to assess about business updates and have opportunities to interact with our our internal target is 3.15%, in line with the White Paper on the Rights of the views of our people across three critical areas, namely employee leadership. The insights and perceptions of our employees are invaluable for Persons with Disabilities. Efforts to enhance awareness and accessibility, engagement, organisational culture and EVP, the results of which are shaping our people management strategies as we advance our turnaround such as training, deploying virtual platforms and providing tailored physical shown below. plan. These engagement efforts are pivotal in boosting morale by enhancing equipment for persons living with disabilities, continue. employees’ sense of connection to the business and each other. OUR EMPLOYEE VALUE PROPOSITION REMUNERATION AND BENEFITS We endeavour to retain and attract skilled, high-performing employees by offering compensation, benefits and service conditions aligned with market standards and within shareholder-established guidelines. Bargaining unit employees receive a basic salary, which includes a thirteenth cheque (referred to as an annual bonus but structured as part of the guaranteed cost to company) and other benefits, such as pension, medical aid, death benefits, as well as housing, cell phone and car allowances, all subject to qualifying criteria. Around 82% of our workforce is covered by collective bargaining agreements with our three recognised trade unions – National Union of Mineworkers (NUM), National Union of Metalworkers of South Africa (NUMSA) and Solidarity. For the 2024 to 2026 financial years, we concluded a three-year collective bargaining agreement with the trade unions, with annual cost- of-living adjustments of 7% for non-managerial employees, to ensure organisational stability while we focus on the turnaround. This is the first The categories above are scored out of 5. 97 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people continued We have several participative structures in place: 100 days of engaging outstanding Guardians • Strategic Forum: An information forum where high-level strategic concerns and principles are debated by high-level representation from Eskom and trade unions GCE • Central Bargaining Forum: A forum for all national consultations and information sharing on issues that have an Eskom-wide impact. Representatives include Eskom management, trade union officials and engagement recognised full-time shop stewards • National Group Divisional Forum: A platform for all national divisional group consultations and information sharing on any issues that affect the divisional group as a whole and fall under the Group Executive’s Over brilliant, hardworking Guardians have warmly welcomed me decision-making authority. Management as well as full-time and part- time shop stewards serve as representatives for the parties What an absolute pleasure it has been engaging • Business Unit Forum: A forum for consultation and information sharing over 10 000 Guardians since I returned to Eskom 100 on matters that fall within the decision-making power of the business days ago. Thank you for so warmly welcoming me. I unit management. It consists of management and part-time shop ϭ͘/ŶƚĞƌŶĂů have always maintained that Eskom Guardians are stewards of the business unit ^ƚĂŬĞŚŽůĚĞƌƐ amongst the best in the world; it was a key factor in • National Steering Committee and Group and Business Unit Steering motivating me to return. I felt a strong drive to play my Committees: These respective structures are responsible for ensuring EŽƚĞǁŽƌƚŚLJ part in helping the world to see the true calibre of our Ϯ͘ŵƉůŽLJĞĞ people and how we can turn around our business and the effective functioning of other forums ĞŵƉůŽLJĞĞ ĞŶŐĂŐĞŵĞŶƚ ŶŐĂŐĞŵĞŶƚ build a culture of performance. I am eagerly looking Over and above the participative structures, Eskom and our recognised ĨĂĐƚƐĨƌŽŵŵLJ forward to coming around the country and meeting as ĨŝƌƐƚϭϬϬĚĂLJƐ trade unions have entered into a collective agreement to establish a many Guardians as I can. If is to be, it is up to us! Restructuring Consultative Framework (RCF), the purpose of which is ϯ͘^ŝƚĞsŝƐŝƚƐ Ke a Leboga to provide a consultative process between the organisation and trade – “boots on unions in the event of an organisational restructuring. The parties agreed the floor” that the RCF would not substitute, supersede or override the provisions Dan Marokane Group Chief Executive of the RA, but would seek to enhance them. In the event of a conflict between the two, the RA would take precedence. We continue to implement our 1:1:6:10 culture transformation The employee assistance programme (EAP) remains a helpful resource To create a disciplined workforce and sound and fair consequence programme, which is a key enabler for delivering a high-performance for employees to overcome personal challenges such as troubled management to foster a productive work environment, we have ethical culture to drive our turnaround plan. As an organisation, we have relationships, financial challenges and grief, as well as workplace challenges developed disciplinary and grievance procedures for the bargaining unit one purpose – to power growth sustainably – which can only be achieved and other areas where counselling and psychosocial support is required. and for managerial employees. These respective procedures outline the by adopting a high-performance ethical culture. Our cultural aspiration is processes to be followed in the event of alleged misconduct; the objective supported by six cornerstones which should be reflected in everything PEOPLE RELATIONS is to correct behaviour that we view as unacceptable and to encourage we do, including how employees interact with one another and with our We facilitate strategic management of the relations and interactions expected behaviour. The grievance procedures provide a mechanism to customers, suppliers, business partners, key stakeholders and the public. between Eskom and employees either as individuals or collectively, deal with any discontent, dissatisfaction and unfair treatment within the These cornerstones are supported by 10 culture levers that will foster with the aim of creating a workplace environment conducive to a high- context of the employment relationship. our aspirational high-performance culture over the medium to long term. performance culture, thereby contributing to the achievement of strategic organisational objectives. FOCUS ON SAFETY HEALTH AND WELLNESS We remain committed to ensuring the health and safety of employees, We prioritise the health and wellbeing of our employees through various Our interactions with trade unions are governed by the Recognition contractors and members of the public. During the year, we launched programmes which are aimed at equipping employees with the tools Agreement (RA) signed by Eskom and its three recognised trade unions: a safety culture survey across the organisation. The findings are being to make healthy and safe choices through prevention, treatment, care, NUM, NUMSA and Solidarity. The RA establishes several participatory analysed and will be used to develop future action plans and safety support, education and partnership. We proactively manage the early structures aimed at promoting good people relations through good faith initiatives. Furthermore, a Safety leadership for supervisors workshop detection and prevention of occupational and lifestyle diseases and bargaining, consultation and information sharing. was launched in March 2024 to offer practical safety leadership strategies, injuries through regular medical surveillance, fitness-for-duty assessments enabling supervisors to mitigate risks, foster a culture of safety and create and various wellness initiatives. a safer working environment. 98 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our people continued We assess our safety performance using lost-time injury rate (LTIR), together with the number of fatalities among employees and contractors. The LTIR FUTURE FOCUS AREAS target reflected in the table below indicates our tolerance level, as the true target is zero, in line with our value of Zero Harm. • Continuing to promote a high-performance ethical culture through the 1:1:6:10 culture transformation programme Target Target Target Target Actual Actual Actual • Increasing the numbers and skill level in the electricity industry to meet Measure and unit 2027 2025 2024 met? 2024 2023 2022 future skills requirements Fatalities (employees and contractors), number1 – – – 5 5 6 • Implementing our workforce plan to support achievement of our Lost-time injury rate, index (including occupational diseases) – groupSC 0.29 0.30 0.30 0.29 0.26 0.24 strategic objectives and turnaround plan • Fostering a future-fit and productive organisation that can adapt to 1. An Eskom employee made contact with electricity in March 2023 and passed away in April 2023. The incident was declared as a work-related fatality by the Safety Data Integrity future market needs and support the Just Energy Transition Committee in January 2024 and the comparative for 2023 was restated. • Becoming an employer of choice by improving processes and practices Sadly, we recorded two employee fatalities (2023: two) and three struck by or caught between objects. A total of 37 occupational diseases linked to remuneration and benefits, while adhering to the conditions contractor fatalities (2023: three) during the year, despite our were confirmed during the year (2023: 23). As in the past, these relate attached to the Eskom Debt Relief Act, 2023 as amended commitment to safety. The causes of these fatalities are shown below. mainly to noise-induced hearing loss incidents, which account for more • Enhancing employee wellbeing, diversity, equity and inclusion than 70% of cases. • Improving accountability and consequence management and 1 1 incentivising the correct behaviour through appropriate performance Initiatives have been developed across the organisation to address the management concerning LTIR trend. These include collaboration, consultation and • Promoting Zero Harm and ensuring that strategic objectives are leadership training on safety initiatives within our business operations, as achieved without compromising the safety of employees, contractors well as leadership onboarding, seminars and workshops. or the public 2024 2023  ublic fatalities are discussed under “Our role in communities – Public IR P 1 safety” on page 104 3 4 Electrical contact Fall from height/elevation Struck by/hit by moving object In memoriam We extend our heartfelt condolences to the families, friends and colleagues of the following individuals who lost their lives while serving Eskom and our customers: Bongani Benson Balura Mduduzi Thulasizwe Gumede Xolisa Manginda Sifiso Lollo Kunene Siphesonke Ngxeza Regrettably, LTIR has shown an upward trend over the last few years due to operational pressures and an associated increase in overtime. The primary contributors to lost-time incidents are falls from the same level, occupational diseases, vehicle accidents and incidents related to being 99 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our role in communities CUSTOMER CENTRICITY Total measured procurement spend Group preferential procurement Electrification programme connections Our intent with customer centricity is to increase Eskom’s competitiveness and sustainability amid market trends and competition, (TMPS) for the group increased to spend with B-BBEE compliant suppliers increased to as well as policy and regulatory changes. Customers are increasingly increased to R240.4 billion 114 800 aiming for energy independence by moving to renewable and self- 2024 240.4 74.35% of TMPS 2024 114 800 generation alternatives to meet their energy requirements. Our value proposition is to provide differentiated energy-related products 2024 74.35 and services with improved grid reliability that will enhance market 2023 102 590 2023 206.2 participation, flexibility and offer choice to customers. 2023 72.80 2022 2022 97 947 176.8 2022 75.89 Number of customers +2.1% +1.6% +1.5% +1.4% CSI grants and donations increased to Number of CSI beneficiaries decreased to Number of Eskom customers increased to R93.1 million 272 217 7 172 296 7 172 296 7 074 672 6 969 164 6 857 029 2024 272 217 6 716 201 2024 93.1 2024 7 172 296 2023 63.0 2023 438 094 2023 7 074 672 2022 75.1 2022 785 085 2022 6 969 164 2020 2021 2022 2023 2024 Eskom adds value to the lives of South Africans by delivering on our Focus areas Objectives commercial mandate, to provide a reliable electricity supply in an efficient The growth in customer numbers has been steadily slowing in recent and sustainable manner. However, we acknowledge that our reputation Skills and Increase the number and skill level of South African years. The number of residential customers increased during the year has declined significantly over the past decade, through a combination of capability workers in areas relevant to the energy sector with a mainly due to the Government-funded electrification programme, governance and operational challenges, culminating in the highest levels of building focus on supplier and enterprise skills together with other new connections. The number of customers have loadshedding during the past year since loadshedding was first implemented Enterprise Develop existing and emerging enterprises owned by declined across agricultural, industrial, mining, commercial and rail sectors, in the 2008 financial year. development designated groups as local suppliers in the energy sector given the challenging economic conditions as well as the adoption of Supplier Support growth by awarding local contracts or alternative supply sources and self-generation through solar, wind, gas and We are striving to be more transparent in how we are addressing these development subcontracting to designated groups, including enterprises diesel by some customers. challenges to ultimately rebuild and strengthen the public’s confidence and that graduated from a supplier development programme trust in Eskom. Furthermore, we aim to enhance the experience of our offered by Eskom or one of our main suppliers customers. IR Detailed customer information, including sales per customer category, is Localisation Support the growth of local manufacturing and set out in the supplementary information on page 121 In addition to our commercial mandate, we make a meaningful contribution and industrialisation to enable economic growth and reduce to South Africa’s development through economic empowerment, industrialisation inequality in South Africa. This will support the transformation and access to electricity through Government’s electrification achievement of national transformation objectives and programme. We also have a responsibility to recognise and protect the lives improve our preferential procurement performance and livelihoods of the communities connected to our operations, which we Community Uplift the communities in which we operate through the are doing through our public safety initiatives and the Just Energy Transition. outreach development of school infrastructure, provision of healthcare We are committed to supporting socio-economic development through projects services and improvement of electricity infrastructure. This skills development, supplier development programmes and corporate social will also assist in mitigating non-technical risks across our investment (CSI) initiatives in line with the focus areas of our socio-economic value chain through community-focused interventions, transformation plan. effective stakeholder management, sound labour relations, contract management, socio-economic development and other interventions 100 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our role in communities continued CUSTOMER SERVICE Customer satisfaction is measured on a continuous basis using a range of perception-based surveys. Target Target Target Target Actual Actual Actual Measure and unit 2027 2025 2024 met? 2024 2023 2022 Key Customer Delight, % 80.0 80.0 80.0 88.1 88.4 85.0 Customer Delight, index 3.7 3.6 3.0 4.4 3.6 3.6 Key Customer Delight performance, which measures the satisfaction of To enhance the customer experience, our responsiveness and customer large industrial customers, remains above target. Key customers have satisfaction, the business will modernise the retail operations by expressed their dissatisfaction with the ongoing supply constraints, leveraging technology and digital self-service channels for ease of contact. loadshedding and load curtailment. Our leadership is empowering staff to drive continuous improvement in operational efficiency and effectiveness in service delivery. The Customer Delight index is a composite customer perception measure, based on customer satisfaction following interaction with customer care channels, as well as operational performance metrics Did you know? related to billing accuracy, planned outages and the resolution of We relaunched the Distribution Demand Management Programme customer issues or queries. (DDMP) in April 2023 to promote load management and energy efficiency. This is aimed at customers willing to reduce consumption We have successfully met our customer service targets for the year and during peak demand hours to help support the national grid and are committed to continuing to offer convenient access to customer care, empowers our customers to better manage their energy use. We including through digital and self-service channels. are aiming to achieve over 1 250MW of demand savings within the Improvements in customer service delivery will be achieved through next three years, with 250MW targeted for the coming year. For operational effectiveness and efficiencies by: further information, refer to www.eskom.co.za/distribution/demand-management-programme/ • Systematic execution and improved timelines for quotes and connections • Customer engagements and empowering customers with self-service channels We are planning to expand our range of products and services to align • Improving reliability of supply and restoration time with customer demands, thereby ensuring our continued relevance, • Prompt resolution of customer queries with improved data quality competitiveness and sustainability in a dynamic energy sector. We are exploring innovative value-added services such as: • Accurate billing based on actual meter readings, with reduced estimations • Provision of access to renewable energy through wheeling, green tariffs and trading platforms • Energy management services, with smart meters, sensors and Did you know? controllers to manage customer load in real time, either to reduce the You can chat to Alfred, our friendly chatbot, at any time at https:// customer’s bill or for load limiting to ensure continuity of supply alfred.eskom.co.za/chatroom/ • Flexible services such as demand response and remote control of geysers, solar PV and batteries as required for network stability by the System Operator 101 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our role in communities continued OUR CONTRIBUTION TO SUPPLIER DEVELOPMENT ELECTRIFICATION We support sustainable supplier development, localisation and industrialisation by leveraging procurement spend to deliver on Government’s policies We continue to connect previously disadvantaged households and and transformation objectives. farm dweller houses in Eskom’s licensed areas of supply under the electrification programme funded by the Government. Group procurement equity In support of the universal access programme, a total of 114 800 Target Target Target Target Actual Actual Actual households were connected to the grid during the year. Measure and unit 2027 2025 2024 met? 2024 2023 2022 Preferential procurement, % of TMPS 80.00 80.00 80.00 74.35 72.80 75.89 We are planning to intensify our efforts and install 233 microgrid units Procurement from black-owned (BO) suppliers, % of TMPS 40.00 40.00 40.00 38.82 42.48 47.08 over the next five years, targeting around 50 units per year. Potential Procurement from black women-owned (BWO) suppliers, % of TMPS 12.00 12.00 12.00 8.29 7.21 9.26 microgrid opportunities have been identified to supply hospitals, schools Procurement from black youth-owned (BYO) suppliers, % of TMPS 2.00 2.00 2.00 4.53 4.26 5.40 and clinics in several provinces. Procurement spend with suppliers owned by black persons living with disabilities 1.00 1.00 1.00 0.10 0.18 0.16 Did you know? (BPwD), % of TMPS Procurement spend with qualifying small enterprises (QSE), % of TMPS 15.00 15.00 15.00 4.50 4.39 4.91 A microgrid is a self-contained system that can supply 150kWh Procurement spend with exempted micro enterprises (EME), % of TMPS 15.00 15.00 15.00 4.65 5.86 7.88 per day, powering up to 30 households, and yielding 800MWh per year. The intention is to use containerised microgrids for rural electrification, supported by Government funding. In addition to the above, we spent R6.1 million on enterprise We achieved only the procurement equity target for black youth-owned development against a target of R5 million (2023: R0.1 million) and spend for the year. Targets across other categories were not met due R8.3 billion on supplier development against a target of R6 billion to previously compliant suppliers electing not to renew their B-BBEE (2023: R3.7 billion). certificates. Furthermore, some suppliers have valid B-BBEE certificates but are recognised at a B-BBEE status of level 9 and are, therefore, During the year, we awarded 1 309 contracts totalling R107.7 billion, with considered non-compliant. In response, we have conducted an analysis to R97.7 billion or 90.72% comprising local content. Of these, 203 contracts identify non-compliant suppliers and requested them to obtain updated supported local content Including manufacturing in designated sectors. B-BBEE certificates. We will continue to monitor progress by non- Furthermore, R65 billion or 60.34% was allocated to local content in compliant suppliers monthly. designated sectors. As reported previously, we have approached the Department of Trade, Industry and Competition (dtic) to request that expenditure on Did you know? IPP contracts be excluded from TMPS when measuring preferential Eskom’s B-BBEE status has improved from level 4 to level 3 due to procurement in the B-BBEE scorecard. These contracts were concluded participation in Government’s Youth Employment Service (YES) in terms of the then DMRE’s RE-IPP Programme, over which Eskom programme, which is an affirmation of our commitment to South had no control. The dtic indicated that there is no legal provision in the Africa’s transformation agenda. B-BBEE Act, 2003 to allow for such an exclusion and proposed that the then DMRE develop a sector-specific scorecard for IPPs. Engagements with Government are still in progress. MAXIMISING OUR SOCIO-ECONOMIC CONTRIBUTION Target Target Target Target Actual Actual Actual Measure and unit 20271 2025 2024 met? 2024 2023 2022 Total electrification connections, number SC 124 149 44 974 85 474 114 800 102 590 97 947 Corporate social investment committed spend, R millionSC 469.6 146.1 137.3 93.1 63.0 75.1 Corporate social investment, number of beneficiaries 1 465 000 450 000 750 000 272 217 438 094 785 085 1. The 2027 target is the cumulative target over the next three years. 102 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our role in communities continued CORPORATE SOCIAL INVESTMENT Our CSI initiatives are centred on enhancing quality of life by concentrating The Eskom Development Foundation NPC (the Foundation), our wholly on programmes that are run according to the themes of education, health, Did you know? owned subsidiary, is responsible for executing Eskom’s CSI strategy, environment, enterprise development, food security, rural education, Eskom’s education programme, The Schoolyard, aims to educate to achieve vital developmental goals within the communities where infrastructure development and social and community development. school children about the value of electricity and the important role we operate and enhance the effectiveness of our socio-economic it plays in our lives. Refer to https://www.eskom.co.za/schoolyard/ contributions. A fundamental aspect of the Foundation’s mission is to To maximise its impact, the Foundation is planning to enter into key to access educational resources on electricity that is tailored for make a positive impact in the lives of South Africans in all nine provinces. strategic public and private partnerships with organisations that share its learners and educators. social responsibility objectives in order to leverage resources and funding. SR A selection of our flagship CSI projects is highlighted in the 2024 sustainability report Supporting an inclusive Just Energy Transition JUST ENERGY TRANSITION We define our Just Energy Transition as a transition towards a low- carbon, climate-resilient economy and society in a manner that secures the future and livelihoods of workers and their communities. To do Ambition so in a manner that is “just” requires us to ensure socio-economic Build JET fund Deliver on the 5 E's required development is not eroded and that sustainable jobs are created partnerships management for a Just Energy Transition: energy, throughout this transition. economy, employment, equity, environment Given the delays in various IPP programmes, we are pursuing the continued Decarbonisation Inclusive Just: Do better for people by creating jobs operation up to 2030 of four older coal-fired stations, namely, Camden, strategy stakeholder and opportunities Hendrina, Grootvlei and Arnot to retain their dispatchable capacity. development and engagements Furthermore, our JET strategy has been decoupled from the planned station implementation Just Energy • Create new high-quality jobs and contribute to new industrial development shutdown, meaning that the repurposing and repowering projects at stations are planned to be rolled out in parallel with continued operations. Transition • Drive coal power stations 2nd life through socioeconomic impact projects To support our JET strategy, we conducted socio-economic impact Thought Just: leaving no one behind Skills assessment (SEIA) studies to understand the effects of decommissioning, leadership development • Reduce water usage and greenhouse gas repurposing and repowering at 10 coal-fired power stations on local (our communities and emissions workers) communities. Initial studies for Komati, Hendrina and Grootvlei began in 2020, followed by studies for Camden, Arnot, Kriel, Matla, Duvha, Tutuka • Obtain and mobilise affordable finance to and Kendal from 2022. These studies were completed in March 2023. enable investments in JET projects The studies identified impacts, risks and opportunities to mitigate Localisation of Enterprise • Leverage collaboration to accelerate economic and societal effects, fostering sustainable livelihoods for technology development execution, catalyse growth and secure affected communities and supporting a just energy transition. Research and offtake agreements planning The Komati SEIA has been published and public consultations have been • Expand and strengthen the national grid concluded. Based on that experience, we developed a communication to support a clean energy-based power strategy to share findings from the other nine stations. Sharing the system SEIA reports will further contribute to South Africa’s JET programme, promoting a common understanding of risks and opportunities around these power stations. Distributive justice Procedural justice Restorative justice 103 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Our role in communities continued REPOWERING AND REPURPOSING PUBLIC SAFETY FUTURE FOCUS AREAS To support communities currently dependent on coal-fired power We are committed to entrenching a culture of Zero Harm, which includes • Restoring our reputation and the public’s confidence and trust in stations, Eskom has planned repowering and repurposing (R&R) projects. the safety of the public. Sadly, we recorded 32 public fatalities, which Eskom We will repower and repurpose coal-fired stations to preserve jobs includes 12 coal haulage incidents, during the year (2023: 17, including one • Diversifying our product and service offerings to adapt to changing and utilise existing grid infrastructure, regardless of shutdown plans. In related to coal haulage), with 10 electrical contact and 10 motor vehicle customer needs and remain competitive in the evolving electricity Mpumalanga, coal-fired stations will be transformed by utilising existing public recordable fatality incidents (PRFI). supply industry infrastructure to develop new generation capacity, including solar PV, • Improving reliability of supply, restoration time and billing accuracy to wind, batteries and synchronous condensers. Did you know? aid in customer retention By 2030, the Komati repowering and repurposing project is projected to A PRFI is an incident resulting in the electrocution of a member of • Addressing procurement equity performance with designated groups generate around 660 full-time and 8 700 temporary jobs. the public by coming into contact with Eskom apparatus within the by reducing B-BBEE non-compliant spend point of supply, as well as any work-related incident where an Eskom • Pursuing funding for enterprise development and supplier development employee or contractor is responsible for the death of a member of in line with the B-BBEE Codes IR Refer to “Sustainability indicators selected for reasonable assurance” on the public. It excludes electrocution resulting from criminal activities • Expanding electricity access to rural and remote areas through page 125 for more information on the targets and outcomes of Komati’s or incidents where a member of the public is solely at fault. A minor containerised microgrids repowering and repurposing project for the year being electrocuted as a result of criminal activity will, however, be • Uplifting communities through CSI programmes for development regarded as a PRFI. of school infrastructure, provision of healthcare services and Associated projects have been identified in and around the Komati area, improvement of electricity infrastructure linking it to repurposing efforts at nearby Hendrina. This entrenches economic sustainability in a localised area, which will sustain and grow We continue to conduct nationwide public safety campaigns aimed • Delivering on the Komati repurposing and repowering project and communities around both stations without duplicating efforts and at educating the public on the safe and proper use of electricity. This concluding socio-economic impact assessments in support of our JET leveraging the strengths of each area. Similar integrated efforts inform includes raising awareness about the dangers associated with illegal strategy prioritised ventures at other sites such as Grootvlei and Camden. This connections, overloaded electrical outlets and the potential risks of • Delivering on JET-related projects, participating in local and approach addresses all three areas of the energy trilemma – namely, purchasing prepaid electricity from unauthorised vendors. Additionally, international business platforms related to JET and sourcing funding for energy security, energy affordability and access, and energy sustainability our safety initiatives urge the public to steer clear of and report hazards future repowering and repurposing projects – and ensures socio-economic and environmentally sustainable and such as low-hanging power lines, meter tampering and vandalism of • Continuing to raise awareness and educate the public on the safe and relevant efforts driven by the JET interventions. electrical infrastructure within their communities. correct use of electricity TRAINING In partnership with the South African Renewable Energy Technology Centre (SARETEC), we have launched a training facility at Komati Power Station to develop local skills and capabilities in the renewables space and support the implementation of our JET strategy. The objective is to upskill and reskill employees at power stations that are due to be shut down, repowered or repurposed, as well as to train beneficiaries from the surrounding communities to ensure that the transition is just. In total, 296 employees and 72 community members have been trained through various training programmes delivered through the Eskom EAL and partnership agreements. Unfortunately, construction of the community training facility at Komati has not been completed due to legal interventions required by SARETEC because the appointed contractor has failed to comply with contractual requirements. A new welding centre has been established at Komati in partnership with the EAL which will address the scarce skills requirements in welding and other artisanal disciplines, feeding associated initiatives like containerised microgrids and solar PV installations with a regular cohort of dedicated skills. We have also established community gardens and agricultural activities at Komati’s agrivoltaics facility. 104 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Supplementary information Abbreviations ACI African, Coloured and Indian AEL Atmospheric emissions licence ARC Audit and Risk Committee (a Board committee) B-BBEE Broad-based black economic empowerment BESS Battery energy storage system BOPC Business Operations Performance Committee (a Board committee) CCMA Council for Conciliation, Mediation and Arbitration CSA Coal supply agreement CSI Corporate social investment DEE Department of Electricity and Energy DFFE Department of Forestry, Fisheries and the Environment DFI Development finance institution DMRE Former Department of Mineral Resources and Energy DoA Delegation of authority DPE Former Department of Public Enterprises DWS Department of Water and Sanitation EAF Energy availability factor (see glossary) EBITDA Earnings before interest, taxation, depreciation and amortisation and fair value adjustments ECA Export credit agency ERI Eskom Rotek Industries SOC Ltd ESP Electrostatic precipitator EUF Energy utilisation factor (see glossary) Exco Executive Management Committee FFP Fabric filter plant FGD Flue gas desulphurisation Abbreviations and glossary of terms 105 Leadership qualifications and directorships 109 GCE Group Chief Executive Statistical tables: technical and non-technical 113 Plant and customer information 118 Environmental implications of using or saving electricity 122 Sustainability indicators selected for GCFO Group Chief Financial Officer reasonable assurance 123 Independent sustainability assurance report 126 GDP Gross domestic product Disclosure of information under the PFMA 128 Expansions and deviations reported to GSC Governance and Strategy Committee (a Board committee) National Treasury 134 Company information 137 105 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Abbreviations continued GW Gigawatt = 1 000 megawatts NEMA National Environmental Management Act, 1998 SADC Southern African Development Community GWh Gigawatt-hour = 1 000MWh NEMAQA National Environmental Management: Air Quality Act, 2004 SAIDI System average interruption duration index HCR Human Capital and Remuneration Committee NERSA National Energy Regulator of South Africa SAIFI System average interruption frequency index (a Board committee) NNR National Nuclear Regulator SALGA South African Local Government Association IASB International Accounting Standards Board (part of the IFRS Foundation) NTCSA National Transmission Company South Africa SOC Ltd SAPP Southern African Power Pool IFC Investment and Finance Committee (a Board committee) OCGT Open-cycle gas turbine (see glossary) SARS South African Revenue Service IFRS® International Financial Reporting Standards OCLF Other capability loss factor (see glossary) SCOA Standing Committee on Appropriations IPP Independent power producer (see glossary) OEM Original equipment manufacturer SCOPA Standing Committee on Public Accounts IRP Integrated Resource Plan PCLF Planned capability loss factor (see glossary) SES Social, Ethics and Sustainability Committee (a Board committee) ISSB International Sustainability Standards Board PFMA Public Finance Management Act, 1999 SIU Special Investigating Unit (part of the IFRS Foundation) PPA Power purchase agreement SOC State-owned company King IV King IV Report on Corporate Governance for South Africa, 2016 PV (Solar) photovoltaic TMPS Total measured procurement spend kℓ Kilolitre = 1 000 litres RCA Regulatory clearing account TWh Terawatt-hour = 1 000GWh KPI Key performance indicator RE-IPP Renewable energy independent power producer UAGS Unplanned automatic grid separations kt Kiloton = 1 000 tons RMIPPPP Risk Management Independent Power Producer UCLF Unplanned capability loss factor (see glossary) kV Kilovolt = 1 000 volts Procurement Programme WANO World Association of Nuclear Operators kWh Kilowatt-hour = 1 000 watt-hours (see glossary) kWhSO Kilowatt-hour sent out LTIR Lost-time injury rate (see glossary) MES Minimum Emission Standards Mℓ Megalitre = 1 million litres MOI Memorandum of Incorporation mSv Millisievert Mt Million tons MVA Megavolt-ampere = 1 million volts MW Megawatt = 1 million watts MWh Megawatt-hour = 1 000kWh MWhSO Megawatt-hour sent out MYPD Multi-year price determination NDP National Development Plan 2030 NEDCSA National Electricity Distribution Company South Africa SOC Ltd 106 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Glossary of terms Arrear debt as percentage of revenue Gross arrear debt written off (relating to electricity receivables only) divided by gross electricity revenue multiplied by 100 Base-load plant Largely coal-fired and nuclear power stations, designed to operate continuously Cash interest cover (ratio) Provides a view of the company’s ability to satisfy the interest burden on its borrowings by utilising cash generated from operating activities. It is calculated as net cash from operating activities divided by net interest paid (interest paid on financing activities less interest received from financing activities) Current ratio (The current portion of inventory, payments made in advance, trade and other receivables and taxation assets) divided by (the current portion of trade and other payables, payments received in advance, provisions, employee benefit obligations and taxation liabilities) Daily peak Maximum amount of energy demanded by consumers in one day Debt/equity including long-term provisions Net financial assets and liabilities plus non-current retirement benefit obligations and non-current provisions divided by total equity Debt service cover (ratio) Cash generated from operations divided by (net interest paid from financing activities plus debt securities and borrowings repaid) Decommission To remove a facility (e.g. reactor) from service and either store it safely or dismantle it Demand-side management Planning, implementing and monitoring activities to encourage consumers to use electricity more efficiently, including both the timing and level of demand EBITDA margin EBITDA as a percentage of revenue (excluding revenue not recognised due to uncollectability) Electricity operating costs per MWh Electricity-related costs (primary energy costs, employee benefit costs plus net impairment loss and other operating expenses, less other income) divided by total electricity sales in GWh multiplied by 1 000 Electricity revenue per kWh Electricity revenue (including electricity revenue not recognised due to uncollectability) divided by total kWh sales multiplied by 100 Embedded derivative Financial instrument that causes cash flows that would otherwise be required by modifying a contract according to a specified variable such as currency Energy availability factor (EAF) Measures power station availability, taking account of both planned and unplanned energy losses under the control of plant management, as well as other non-controllable energy losses Energy efficiency Programmes to reduce energy used by specific end-use devices and systems, typically without affecting services provided Energy utilisation factor (EUF) Ratio of actual electrical energy produced during a period of time divided by the total available energy capacity. It is a measure of the degree to which the available energy capacity of an electricity supply network is utilised. Available energy capacity refers to the capacity after all unavailable energy (planned and unplanned energy losses) has been taken into account, and represents the net energy capacity made available to the System Operator or national grid Fatality A fatality is an incident occurring at work, or arising out of or in connection with the activities of persons at work, or in connection with the use of plant or machinery, in which or in consequence of which, any person (an employee, contractor, or member of the public) dies, regardless of the time intervening between the injury and/or exposure to the cause and death. The date of the incident will reflect the date on which the incident occurred, irrespective of the date of death Forced outage Shutdown of a generating unit, transmission line or other facility for emergency reasons or a condition in which generating equipment is unavailable for load due to unanticipated breakdown Free basic electricity Amount of electricity deemed sufficient to provide basic electricity services to a poor household (50kWh per month) Free funds from operations Cash generated from operations adjusted for working capital Gross debt Debt securities and borrowings plus finance lease liabilities plus the after-tax effect of provisions and employee benefit obligations Gross debt/EBITDA ratio Gross debt divided by earnings before interest, taxation, depreciation, amortisation and fair value adjustments Independent non-executive director A director who: • Is not a full-time salaried employee of the company or its subsidiary • Is not a shareholder representative • Has not been employed by the company and is not a member of the immediate family of an individual who is or has been, in any of the past three financial years, employed by the company in any executive capacity • Is not a professional advisor to the company • Is not a significant supplier or customer of the company • Is not receiving remuneration contingent on the performance of the company Independent power producer (IPP) Any entity, other than Eskom, that owns or operates, in whole or in part, one or more independent power generation facilities Kilowatt-hour (kWh) Basic unit of electric energy equal to one kilowatt of power supplied to or taken from an electric circuit steadily for one hour 107 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Glossary of terms continued Load Amount of electric power delivered or required on a system at any specific point Load curtailment Typically, larger industrial customers reduce their demand by a specified percentage for the duration of a power system emergency. Due to the nature of their business, these customers require two hours’ notification before they can reduce demand Load management Activities to influence the level and shape of demand for electricity so that demand conforms to the present supply situation, long-term objectives and constraints Loadshedding Scheduled and controlled power cuts that rotate available capacity between all customers when demand is greater than supply in order to avoid blackouts. Distribution or municipal control rooms open breakers and interrupt load according to predefined schedules. Use of the term loadshedding typically includes the concept of load curtailment Lost-time injury (LTI) A work injury which arises out of and in the course of employment and which renders the injured employee or contractor unable to perform his/her regular/normal work on one or more full calendar days or shifts other than the day or shift on which the injury occurred. It includes occupational diseases and fatalities Lost-time injury rate (LTIR) Proportional representation of the occurrence of lost-time injuries over 12 months per 200 000 working hours Major incident An interruption with a severity ≥1 system minute Maximum demand Highest demand of load within a specified period Non-technical losses Energy losses due to electricity theft through illegal connections, tampering and bypassing of electricity meters, as well as the purchase of electricity tokens from unregistered or illegal vendors. It includes meter reading and billing errors Occupational disease/illness Any confirmed disease/illness arising out of, and in the course of, an employee’s employment, that is listed in Schedule 3 of the Compensation for Occupational Injuries and Diseases (COID) Act, 1993, or any other condition as determined by an occupational medical practitioner Off-peak Period of relatively low system demand Open-cycle gas turbine (OCGT) Liquid fuel turbine power station that forms part of peak-load plant and runs on kerosene or diesel. Designed to operate in periods of peak demand Other capability loss factor (OCLF) Energy losses outside of a station’s control as well as internal non-engineering constraints Outage Period in which a generating unit, transmission line, or other facility is out of service Peak demand Maximum power used in a given period, traditionally between 7:00 and 10:00 as well as 18:00 to 20:00 in summer; and 6:00 to 9:00 as well as 17:00 to 19:00 in winter Peaking capacity Generating equipment normally operated only during hours of highest daily, weekly or seasonal loads Peak-load plant Gas turbines, hydroelectric or a pumped storage scheme used during periods of peak demand Planned capability loss factor (PCLF) Energy losses due to planned maintenance on power station units, whether due to full shutdowns or partial load reduction Primary energy Energy in natural resources, e.g. coal, diesel, uranium, sunlight, wind and water Pumped storage scheme A lower and an upper reservoir with a power station/pumping plant between the two. During off-peak periods the reversible pumps/turbines use electricity to pump water from the lower to the upper reservoir. During periods of peak demand, water runs back into the lower reservoir through the turbines, generating electricity Reserve margin Difference between net system capability and the system’s maximum load requirements (peak load or peak demand) Return on assets EBIT divided by the regulated asset base, which is the sum of property, plant and equipment, trade and other receivables, inventory and future fuel, less trade and other payables and deferred income Sustainability Refers to practices that can be maintained without harming the environment, society or the economy, and considers future generations. It involves finding a balance between the needs of the present and the ability of future generations to meet their own needs System minutes Global benchmark for measuring the severity of transmission network interruptions to customers. One system minute is equivalent to the loss of the entire system for one minute at annual peak. A major incident is an interruption with a severity ≥1 system minute Technical losses Naturally occurring losses that depend on the power systems used Unit capability factor (UCF) Measure of availability of a generating unit, indicating how well it is operated and maintained Unplanned capability loss factor (UCLF) Energy losses due to outages are considered unplanned when a power station unit has to be taken out of service and it is not scheduled at least four weeks in advance Used nuclear fuel Nuclear fuel irradiated in and permanently removed from a nuclear reactor. Used nuclear fuel is stored on site in used fuel pools or storage casks Watt The watt is the International System of Units’ (SI) standard unit of power. It specifies the rate at which electrical energy is dissipated (energy per unit of time) Wheeling Refers to the movement of electricity between international customers through Eskom’s network, without the power being available to customers on the South African grid 108 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Leadership qualifications and directorships BOARD OF DIRECTORS Dr Mteto (M) Nyati (59) Ms Fathima (FBB) Gany (48) Mr Clive (CR) le Roux (72) Chairman Independent non-executive director Independent non-executive director Independent non-executive director Appointed to Board in October 2022 Appointed to Board in October 2022 Appointed to Board in October 2022 Qualifications and designations Qualifications and designations Qualifications and designations B Accounting Sciences (Unisa) B Sc Electrical Engineering (cum laude) B Sc Mechanical Engineering (University of B Compt (Hons) (Unisa) (University of Witwatersrand) KwaZulu-Natal) Certificate of Theory in Accounting (Unisa) Advanced Executive Diploma in Leadership Ph D (Honoris Causa) Information Chartered Accountant (SA) (Unisa) Technology Management (University Advanced Certificate in Auditing of Johannesburg) Certificate in Strategy Design (GIBS) Directorships Certificate in Strategy Execution (GIBS) None Directorships Accelerated Growth Partners (Pty) Ltd Directorships Ms Ayanda (APZ) Mafuleka (44) Ammoa (Pty) Ltd Air Chefs SOC Ltd Independent non-executive director Business Systems Group (Africa) (Pty) Ltd Kunjali Consulting (Pty) Ltd Appointed to Board in October 2022 Sako Green Energy (Pty) Ltd Kunjali Investment Holdings (Pty) Ltd The Collective X NPC South African Airways SOC Ltd Qualifications and designations Wazo Investments (Pty) Ltd South African Airways Technical SOC Ltd B Com Management (University of South African Post Office SOC Ltd KwaZulu-Natal) Mr Dan (DL) Marokane (52) B Compt (Hons) (Unisa) Group Chief Executive Mr Lwazi (LL) Goqwana (48) Chartered Accountant (SA) Executive director Independent non-executive director Certificate in Advanced Financial Appointed to Board in March 2024 Appointed to Board in October 2022 Management (University of Johannesburg) Qualifications and designations Qualifications and designations Directorships B Sc Chemical Engineering B Sc (Hons) Mechanical Engineering Rand Water Foundation NPC (University of Cape Town) (University of Cape Town) M Sc Petroleum Engineering MBA (Milpark Business School) Mr Leslie (LA) Mkhabela (51) (University of London) Pr Eng (Engineering Council of South Africa) Independent non-executive director DIC (Imperial College London) Appointed to Board in October 2022 MBA (University of Cape Town) Directorships Allpides (Pty) Ltd Qualifications and designations Directorships Infrastructure Specialist Group (Pty) Ltd B Juris (University of Limpopo) Energy Council of South Africa NPC MPA Consortium LLB (University of Limpopo) National Society of Black Engineers of South Admitted Attorney Mr Calib (C) Cassim (52) Africa NPC Directorships Group Chief Financial Officer Paminar (Pty) Ltd China Africa Joint Arbitration Centre Executive director Rocla (Pty) Ltd Johannesburg NPC Appointed to Board in July 2017 Technicrete ISG (Pty) Ltd Dunocol (Pty) Ltd Technicrete Mining Services (Pty) Ltd Jordigraph (Pty) Ltd Qualifications and designations Zepide Group (Pty) Ltd B Com (University of KwaZulu-Natal) Khomanani Group (Pty) Ltd B Accounting Sciences (Unisa) Mkhabela Huntley Attorneys Inc Chartered Accountant (SA) Roodt Mkhabela Inc Master of Business Leadership (Unisa) The Arbitration Foundation of Southern Africa NPC Directorships Escap SOC Ltd Ages are shown at 31 March 2024. Eskom Enterprises SOC Ltd Only active directorships and memberships are reflected. Eskom Finance Company SOC Ltd 109 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Leadership qualifications and directorships continued BOARD OF DIRECTORS continued Dr Tsakani (TL) Mthombeni (44) Ms Tryphosa (T) Ramano (52) Dr Claudelle (C) von Eck (53) Independent non-executive director Independent non-executive director Independent non-executive director Appointed to Board in October 2022 Appointed to Board in October 2022 Appointed to Board in October 2022 Qualifications and designations Qualifications and designations Qualifications and designations B Sc (Hons) Electrical Engineering B Com (University of Cape Town) BA Psychology (University of Witwatersrand) (University of Cape Town) Postgraduate Diploma in Accounting Diploma in Business Management (Institute of M Sc Electrical Engineering (Clarkson (University of Cape Town) Accounting and Commerce) University) Chartered Accountant (SA) Certified Director (Institute of Directors Ph D Electrical Engineering (Clarkson South Africa) University) Directorships Master of Business Leadership (Unisa) Denel SOC Ltd D Phil Leadership (Change Management) Directorships GBVF Response Fund1 NPC (University of Johannesburg) KPTL Investments (Pty) Ltd K2021862248 (South Africa) (Pty) Ltd Royal Bafokeng Platinum Ltd Kwaheri Psychiatry (Pty) Ltd Directorships Longmarket Capital Brave Inflexions (Pty) Ltd Mr Bheki (B) Ntshalintshali (70) National Transmission Company South Africa Mapungubwe Institute for Strategic Independent non-executive director SOC Ltd Reflection NPC Appointed to Board in October 2022 Public Investment Corporation SOC Ltd MVE Horizons Human Capital Solutions cc Solidarity Response Fund NPC Qualifications and designations Tumaini Psychiatry (Pty) Ltd Comparative Industrial Relations The International Women’s Forum South (Ruskin College) Africa NPC Diploma in Industrial Relations Urithi Psychiatry (Pty) Ltd (Allenby College) University of Pretoria Directorships Dr Busisiwe (CB) Vilakazi (40) National Labour and Economic Independent non-executive director Development Institute NPC The Rand Mutual Assurance Company Ltd Appointed to Board in October 2022 Qualifications and designations B Sc Electrical Engineering (University of Witwatersrand) M Sc Engineering (University of Witwatersrand) MBA (University of Witwatersrand) Ph D Engineering Science (University of Oxford) Directorships Macsteel Service Centres SA (Pty) Ltd Milpark BEE Investment (Pty) Ltd National Transmission Company South Africa SOC Ltd Ndilantswa Group (Pty) Ltd Sako Green Energy (Pty) Ltd Ages are shown at 31 March 2024. Stadio Holdings Ltd Only active directorships and memberships are reflected. 110 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Leadership qualifications and directorships continued EXECUTIVE MANAGEMENT COMMITTEE Mr Dan (DL) Marokane (52) Ms Faith (FS) Burn (55) Ms Elsie (EM) Pule (56) Group Chief Executive Chief Information Officer Group Executive: Human Resources Appointed to Exco in March 2024 Appointed to Exco in May 2020 Appointed to Exco in November 2014 5 years in Eskom (including from 2010 to 2015) 3 years in Eskom 26 years in Eskom Qualifications and designations Qualifications and designations Qualifications and designations B Sc Chemical Engineering B Sc Mathematics and Computer Science BA Social Work (University of the North) (University of Cape Town) (University of Johannesburg) BA (Hons) Psychology (University of Pretoria) M Sc Petroleum Engineering B Sc (Hons) Mathematics M Sc Business Engineering (Warwick (University of London) (University of Johannesburg) University) DIC (Imperial College London) M Sc Mathematics (University of MBA (University of Cape Town) Johannesburg) Directorships Master of Business Leadership (Unisa) None Directorships Certified Internal Auditor (CIA) Energy Council of South Africa NPC Ms Jainthree (J) Sankar (52) Directorships Chief Procurement Officer Mr Calib (C) Cassim (52) Kingdom Consultant Center NPC Appointed to Exco in March 2021 Group Chief Financial Officer South African National Blood Services NPC 30 years in Eskom Appointed to Exco in July 2017 (SANBS) 22 years in Eskom Qualifications and designations Mr Bheki (BJ) Nxumalo (55) B Com (Unisa) Qualifications and designations Group Executive: Generation B Com (Hons) Business (Unisa) B Com (University of KwaZulu-Natal) Attended Exco in a participatory role National Diploma in Electrical Engineering B Accounting Sciences (Unisa) from April 2023 (Durban University of Technology) Chartered Accountant (SA) Appointed to Exco in June 2023 MBA Sustainable Business Master of Business Leadership (Unisa) 27 years in Eskom (University of Southern Queensland) Master of Project Management Directorships Qualifications and designations (University of Southern Queensland) Escap SOC Ltd National Diploma in Chemical Engineering Eskom Enterprises SOC Ltd (Mangosuthu University of Technology) Directorships Eskom Finance Company SOC Ltd National Higher Diploma in Chemical None Engineering (Vaal University of Technology) Mr Monde (ML) Bala (50) MBA (North West University) Group Executive: Distribution Attended Exco in a participatory role Directorships from April 2023 BJ Zwide Nozalo (Pty) Ltd Appointed to Exco in June 2023 Eskom Enterprises SOC Ltd 27 years in Eskom Eskom Rotek Industries SOC Ltd Fountaindale Farming (Pty) Ltd Qualifications and designations Takuwani Holdings (Pty) Ltd B Sc Electrical Engineering (University of Cape Town) Graduate Diploma in Industrial Engineering (University of Witwatersrand) Master of Engineering Ages are shown at 31 March 2024. (University of Witwatersrand) Only active directorships and memberships are reflected. The departure of Ms Elsie Pule, Group Executive: Human Resources, was announced in Directorships June 2024, with her last day on 31 July 2024. To ensure leadership stability and business Eskom Rotek Industries SOC Ltd continuity, Mr Monde Bala was appointed to act in the position with effect from National Electricity Distribution Company of 24 June 2024, in addition to his role as Group Executive: Distribution, while the recruitment process is underway. South Africa SOC Ltd 111 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Leadership qualifications and directorships continued EXECUTIVE MANAGEMENT COMMITTEE continued Mr Segomoco (SM) Scheppers (60) Mr Sthembiso (HS) Vezi (50) Group Executive: Transmission Acting Group Executive: Legal and Attended Exco in a participatory role Compliance from April 2023 Attended Exco in a participatory role from Appointed to Exco in June 2023 January 2024 30 years in Eskom 1 year in Eskom Qualifications and designations Qualifications and designations B Sc Engineering (University of B Proc (University of Transkei) Witwatersrand) Master of Business Leadership (Unisa) Graduate Diploma in Engineering LLM in Construction Law and Arbitration (University of Witwatersrand) (Robert Gordon University) MBA (University of Witwatersrand) LLM in Oil, Gas and Renewable Energy Law (Robert Gordon University) Directorships Diploma in Corporate Law (Unisa) National Transmission Company Postgraduate Certificate in Construction South Africa SOC Ltd Project Management (RICS) South African National Energy Association Advanced Certificate in Construction Law and (SANEA) NPC Engineering Contracts (University of Pretoria) Postgraduate Certificate in Compliance Ms Natasha (NN) Sithole (61) Management (University of Cape Town) Acting Group Executive: Government Admitted Attorney and Regulatory Affairs Appointed to Exco in August 2023 Directorships 31 years in Eskom None Qualifications and designations Mr Vuyolwethu (V) Tuku (48) B Com (Unisa) Group Executive: Transformation Management Office Directorships None Appointed to Exco in July 2020 3 years in Eskom Qualifications and designations B Sc Electrical Engineering (University of Cape Town) MBA (University of Witwatersrand) Ages are shown at 31 March 2024. Only active directorships and memberships are reflected. Directorships None Mr Segomoco Scheppers ceased to be a director of the National Transmission Company South Africa SOC Ltd (NTCSA) on 1 February 2024, following the appointment of independent non-executive directors to the NTCSA board. He was subsequently appointed as an executive director in the position of interim CEO on 1 July 2024, when NTCSA commenced trading. Mr Sthembiso Vezi attended Exco in a participatory role from January 2024 and was appointed to act as Group Executive: Legal and Compliance from 1 April 2024. Subsequent to year end, Mr Jerome Mthembu was appointed as the Head of Legal and Compliance on 1 May 2024. The fixed-term contract of Mr Vuyolwethu Tuku, Group Executive: Transformation Management Office, came to an end on 30 June 2024. 112 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Technical statistics Measure and unit 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Customer statistics Arrear debt as % of revenue, % 3.95 4.80 3.91 3.24 3.69 4.30 RA 2.73RA 2.42 1.14 2.17 Debtors days – municipalities, average debtors days 212.6 179.3 149.6 140.7 116.1 94.3RA 76.6RA 53.3RA 42.9 47.6 Debtors days – large power top customers excluding disputes, average debtors days 15.5 14.5 14.6 15.0 14.6 13.5RA 13.9RA 15.3RA 15.5 16.8 Debtors days – other large power users (<100 GWh p.a.), average debtors days 16.5 16.3 17.5 17.5 17.0 17.2RA 16.6RA 16.8 RA 16.2 17.0 Debtors days – small power users (excluding Soweto), average debtors days 45.2 46.2 47.7 50.1 44.1 42.6RA 43.4RA 48.8 RA 48.2 49.1 Key Customer Delight, %1 88.1 88.4 85.0 86.2 81.5 81.7 79.5 107.0 104.3RA 108.7 Sales and revenue Total sales, GWh2 183 311 188 401 198 281 191 852 205 635 208 319 212 190 214 121 214 487 216 274 (Reduction)/growth in GWh sales, % (2.7) (5.0) 3.4 (6.7) (1.3) (1.8) (0.9) (0.2) (0.8) (0.7) Electricity revenue, R million 294 061 257 837 244 461 202 644 197 307 177 312 174 905 175 094 161 688 146 268 Growth in revenue, % 14.0 5.5 20.6 2.7 11.3 1.4 (0.1) 8.3 10.5 6.9 Electricity output Power sent out by Eskom stations, GWh (net) 184 576 191 307 205 688 201 400 214 968 218 939 221 936 220 166 219 979 226 300 Coal-fired stations, GWh (net) 166 607 171 131 184 568 183 553 194 357 200 210 202 106 200 893 199 888 204 838 Hydroelectric stations, GWh (net) 1 448 3 060 1 943 1 387 688 1 029 709 579 688 851 Pumped storage stations, GWh (net) 4 386 4 081 4 743 4 795 5 060 4 590 4 479 3 294 2 919 3 107 Gas turbine stations, GWh (net) 3 634 3 018 1 826 1 457 1 328 1 202 118 29 3 936 3 709 Wind energy, GWh (net) 329 214 253 305 283 328 331 345 311 1 Nuclear power station, GWh (net) 8 172 9 803 12 355 9 903 13 252 11 580 14 193 15 026 12 237 13 794 IPP purchases, GWh 20 183 17 957 15 973 13 526 11 958 11 344 9 584 11 529 9 033 6 022 Wheeling, GWh 2 449 2 904 2 499 2 310 2 491 2 750 2 266 2 910 3 930 3 623 Energy imports from SADC countries, GWh 9 150 8 654 8 500 8 812 8 568 7 355 7 731 7 418 9 703 10 731 Total electricity available (generated by Eskom and purchased), GWh 216 358 220 822 232 660 226 048 237 985 240 388 241 517 242 023 242 645 246 676 Consumed by pumped storage stations, GWh3 (5 710) (5 504) (6 434) (6 625) (6 629) (5 981) (6 031) (4 808) (4 046) (4 114) Total available for distribution, GWh2 210 648 215 318 226 226 219 423 231 356 234 407 235 486 237 215 238 599 242 562 Supply and demand Total Eskom power station capacity – installed, MW 52 451 52 451 51 866 51 115 49 517 48 029 48 039 46 407 45 075 44 281 Total Eskom power station capacity – nominal, MW 46 788 46 788 47 145 46 466 45 117 44 172 45 561 44 134 42 810 42 090 Total IPP power station capacity – nominal, MW 7 495 7 110 6 831 6 083 5 206 4 981 4 779 5 027 3 392 2 606 Peak demand on integrated Eskom system, MW 27 854 30 808 31 953 31 470 32 948 34 256 35 457 34 122 33 343 34 768 Peak demand on integrated Eskom system, including load reductions and non-Eskom generation, MW 33 873 34 666 35 005 34 155 34 510 35 345 35 769 34 913 34 499 36 156 Loadshedding implemented, number of days 329RA 280 RA 65 47 46 30 0 0 81 37 Asset creation Generation capacity installed and commissioned, MW 0 RA 799RA 794 RA 1 598 RA 1 588 RA 0 RA 2 387RA 1 332RA 794 RA 100 RA Transmission lines installed, km 74.4 RA 326.1RA 180.5RA 65.6RA 127.9RA 378.7RA 722.3RA 585.4RA 345.8 RA 318.6RA Transmission transformer capacity installed and commissioned, MVA 23RA – RA 1 065RA 750 RA 250 RA 540 RA 2 510 RA 2 300 RA 2 435RA 2 090 RA Total capital expenditure – group (excluding capitalised borrowing costs), R billion 37.0 33.9 30.2 23.9 23.4 33.9 48.0 60.0 57.4 53.1RA 1. This measure was introduced in 2020 and is calculated on a 12-month moving average. Prior to 2020, the comparatives are for Eskom KeyCare. 2. The difference between electricity available for distribution and electricity sold is mainly due to energy losses. 3. Used by Eskom for pumped storage facilities and synchronous condenser mode of operation. RA Reasonable assurance provided by the independent assurance provider for the respective year. Refer to pages 126 to 127 for the independent sustainability assurance report relating to 2024. 113 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Technical statistics continued Measure and unit 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Safety Employee lost-time injury rate (LTIR) – group, index1 0.29RA 0.26RA 0.24RA 0.22RA 0.30 RA 0.31RA 0.24 0.39 0.30 0.33 Fatalities (employees and contractors), number 5 5 6 11 9 7 14 10 17 10 Employee fatalities, number 2 2 4 3 – 3 3 4 4 3 Contractor fatalities, number 3 3 2 8 9 4 11 6 13 7 Plant performance Energy availability factor (EAF), %2 54.56RA 56.03RA 62.02RA 64.19RA 66.64RA 69.95RA 78.00 RA 77.30 RA 71.07RA 73.73RA Planned capability loss factor (PCLF), %2 12.04 RA 10.39RA 10.23RA 12.26RA 8.92RA 10.18 RA 10.35RA 12.14RA 12.99 9.91RA Unplanned capability loss factor (UCLF), %2 32.34 RA 31.92 25.35 20.04 22.86 18.31 10.18 9.90 14.91RA 15.22RA Other capability loss factor (OCLF), %2 1.06RA 1.66 2.40 3.51 1.58 1.56 1.47 0.66 1.03 1.14 Unit capability factor (UCF), %2 55.62 57.69 64.42 67.70 68.22 71.51 79.47 78.00 72.10 74.87 Generation load factor, %2 44.6 45.7 49.5 49.0 52.6 54.4 55.9 57.9 58.8 61.5 OCGT load factor, % 17.2 14.3 8.7 6.9 6.3 5.7 0.6 0.1 18.6 17.6 Unplanned automatic grid separations (UAGS trips), number2 593 736RA 697RA 527RA 594RA 517 333 444 469 575 Integrated Eskom system load factor (EUF), %2 81.8 81.5 79.8 76.3 79.0 77.8 71.6 75.0 82.7 83.4 Primary energy Coal stock, days 80 65 76RA 82 81 67 68 74 58 51 Road-to-rail migration (additional tonnage transported on rail), Mt 2.6 2.5RA 2.5RA 3.6RA 7.5RA 8.2RA 11.6Q 13.2Q 13.6RA 12.6RA Coal purchased, Mt 107.5 98.4 108.7 110.0 119.3 118.3 115.3 120.3 118.7 121.7 Coal burnt, Mt 99.5 102.4 110.3 104.9 108.6 113.8 115.5 113.7 114.8 119.2 Average calorific value, MJ/kg 19.62 19.42 19.64 19.82 19.08 19.24 19.81 20.05 19.57 19.68 Average ash content, % 31.79 32.13 31.39 31.24 29.65 30.98 30.92 28.62 28.19 27.63 Average sulphur content, % 0.77 0.79 0.83 0.82 0.78 0.84 0.87 0.84 1.07 0.80 Overall thermal efficiency, %3 30.71 30.56 30.05 30.61 30.65 30.99 31.22 31.20 31.08 31.44 Diesel and kerosene usage for OCGTs, Mℓ 1 129.5 937.5 580.4 458.7 426.2 385.0 37.8 10.0 1 247.8 1 178.6 Network performance Total system minutes lost for events <1, minutes 3.29 RA 4.71RA 2.88 RA 3.48 RA 4.36RA 3.16RA 2.09RA 3.80 RA 2.41RA 2.85RA Major incidents, number 1 1 2 2 3 3 0 0 1 2 System average interruption frequency index (SAIFI), events4 11.7 11.8 12.3RA 13.2RA 14.4 RA 14.9RA 17.5RA 18.9RA 20.5RA 19.7RA System average interruption duration index (SAIDI), hours4 34.9RA 35.5RA 35.5RA 35.4RA 36.9RA 38.0 RA 34.9RA 38.9RA 38.6RA 36.2RA Total energy losses, % 11.9 11.8 11.4 11.8 9.9 9.7 9.1 8.9 8.6 8.8 Transmission energy losses, % 2.2 2.3 2.3 2.3 2.2 2.2 2.0 2.2 2.6 2.5 Distribution energy losses, % 9.9RA 9.7RA 9.6RA 10.1RA 8.8 RA 8.5RA 7.7RA 7.6RA 6.4 6.8 1. The employee LTIR includes occupational diseases and fatalities. 2. The calculation of KPIs include all units at Medupi as well as Kusile Units 1 to 4. Units are only included one year after achieving commercial operation, therefore Kusile Unit 5 is still excluded; Kusile Unit 4 has been included since 1 June 2023. 3. Only power stations where all units have achieved commercial operation are included in the calculation. Therefore, Kusile Power Station is excluded from this KPI. 4. SAIDI and SAIFI are reported after allowing for exclusions defined in the National Regulated Standards adopted from 1 April 2018. RA Reasonable assurance provided by the independent assurance provider for the respective year. Refer to pages 126 to 127 for the independent sustainability assurance report relating to 2024. 114 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Technical statistics continued Measure and unit 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Environmental statistics Emissions Relative particulate emissions, kg/MWh sent out1, 2, 3 0.79RA 0.70 RA 0.34RA 0.38Q 0.47RA 0.47RA 0.27RA 0.30 RA 0.36RA 0.37RA Carbon dioxide (CO2), Mt 2 190.4 RA 187.5RA 207.2RA 206.8 RA 213.2RA 220.9RA 205.5RA 211.1RA 215.6RA 223.4 Carbon dioxide equivalent (CO2-eq), Mt 2 190.9 187.9 207.7 207.3 214.0 221.7 – – – – Sulphur dioxide (SO2), kt 2 1 431 1 449 1 671 1 604 1 721 1 853 1 802 1 766 1 699 1 834 Nitrous oxide (N2O), t 2 1 382 1 438 1 561 1 527 2 826 2 844 2 642 2 782 2 757 2 919 Nitrogen oxide (NO x) as NO2, kt4 735 743 822 804 851 890 859 885 893 937 Methane (CH4), t 2 1 523 1 483 1 466 1 442 – – – – – – Particulate emissions, kt 145.30 RA 129.32 66.65 71.35 94.92 99.87 57.13 65.13 78.37 82.34 Water Specific water consumption, ℓ/kWh sent out1 1.43RA 1.39RA 1.45RA 1.42RA 1.42RA 1.41RA 1.30 RA 1.42RA 1.44RA 1.38 RA Net raw water consumption, Mℓ 260 680 256 430 283 610 270 736 286 553 292 344 276 335 307 269 314 685 313 078 Waste Ash produced, Mt 29.27 30.20 32.90 30.84 32.04 33.23 31.65 32.61 32.59 34.41 Ash sold, Mt 2.5 2.6 2.8 3.1 2.9 2.8 2.7 2.8 2.7 2.5 Ash recycled, % 9.0 12.0 11.0 10.1 9.1 8.4 8.6 8.5 8.3 7.3 Asbestos disposed, tons 143.6 171.1 39.5 22 475.8 59.8 464.1 144.9 383.0 274.5 991.0 Material containing polychlorinated biphenyls thermally destroyed, tons 5.1 96.2 46.5 134.3 238.3 43.1 26.3 61.9 59.8 0.0 Nuclear Public individual radiation exposure due to effluents, mSv5 0.0012 0.0022 0.0010 0.0014 0.0004 0.0026 0.0012 0.0005 0.0006 0.0010 Low-level radioactive waste generated (steel drum), cubic metres 188.2 164.6 158.9 147.6 159.3 188.3 164.2 162.9 176.1 164.1 Low-level radioactive waste disposed of, cubic metres 415.1 348.3 98.1 117.0 98.3 99.0 118.8 108.0 213.1 377.6 Intermediate-level radioactive waste generated (concrete drum), cubic metres 43.2 18.3 34.2 31.2 22.3 20.8 20.8 11.4 33.4 27.6 Intermediate-level radioactive waste disposed of, cubic metres 168 192 88 18 38 0 0 0 0 138 Used nuclear fuel, number of elements discharged 6 56 48 56 116 48 56 116 60 56 112 Used nuclear fuel, number of elements discharged, cumulative figure 2 785 2 729 2 681 2 625 2 509 2 461 2 405 2 289 2 229 2 173 Legal contraventions Environmental legal contraventions, number 68 105 65 81 59 24 30 29 20 20 Environmental legal contraventions reported as a result of significant failure of business systems, 7 10 7 7 5 2 2 0 1 1 number7 1. The calculation of KPIs include all units at Medupi as well as Kusile Units 1 to 4. Units are only included one year after achieving commercial operation, therefore Kusile Unit 5 is still excluded; Kusile Unit 4 has been included since 1 June 2023. 2. Figures are calculated based on coal characteristics and power station design parameters using coal analysis and coal burnt tonnages. Figures include coal-fired and gas turbine power stations, as well as oil consumed during power station start-ups. For carbon dioxide emissions, it also includes the underground coal gasification pilot plant. 3. At power stations with unusually high particulate emission levels, such as Kendal Power Station, the monitors often exceed their maximum limits. In instances where these ranges are exceeded, particulate emissions will be reported at the maximum of the monitor range. From February 2019, it is possible that actual emissions exceeded reported emissions based on measurements. 4. NO x reported as NO2 is calculated using average station-specific emission factors (which are measured intermittently) and tonnages of coal burnt. 5. The limit set by the National Nuclear Regulator is ≤0.25mSv. 6. The gross mass of a nuclear fuel element is approximately 670kg, with Uranium mass typically between 462kg and 464kg. 7. Specific cases of environmental legal contravention incidents that are considered to be of very high significance in terms of their impact on the environment and/or on Eskom are recorded as incidents as a result of a significant failure of business systems. Prior to 2022, referred to as “legal contraventions reported in terms of the Operational Health Dashboard”. RA Reasonable assurance provided by the independent assurance provider for the respective year. Refer to pages 126 to 127 for the independent sustainability assurance report relating to 2024. Q Qualified by the independent assurance provider for the respective year. 115 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Non-technical statistics: Group Measure and unit 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Finance1 Electricity operating costs, R/MWh 1 377.09 1 201.71 981.94 895.05 791.04 712.87 622.41 651.98 617.02 587.97 EBITDA margin, % 14.67 13.32 21.39 15.96 18.46 17.46 25.57 21.19 20.29 16.54 EBITDA, R million 43 410 RA 34 565RA 52 954RA 32 608 RA 36 816RA 31 417 45 359 37 532 32 811 24 186 Cash interest cover, ratio 1.18 RA 1.29RA 1.69RA 0.85RA 0.94RA 0.94 1.22 1.73 1.73 1.75 Debt service cover, ratio 0.46 RA 0.58 RA 0.76RA 0.30 RA 0.52RA 0.47 0.87 1.37 1.14 0.91 Current ratio 0.98 0.89 0.90 0.95 0.82 1.00 1.03 0.85 0.83 0.81 Gross debt/EBITDA, ratio 11.58 13.92 8.54 13.98 14.43 15.73 9.74 10.84 10.95 13.60 Debt/equity (including long-term provisions), ratio 1.99 1.88 1.81 2.03 2.44 3.17 2.58 2.11 1.65 2.50 Gearing, % 67 65 64 67 71 76 72 68 62 71 Free funds from operations, R million 53 975 43 847 63 795 42 972 41 120 29 047 40 022 47 571 39 443 36 179 Free funds from operations after net interest paid, R million 19 830 11 567 31 904 6 496 2 606 (5 940) 9 147 21 148 17 927 20 564 Free funds from operations as % of gross debt, % 10.74 9.12 14.11 9.42 7.74 5.88 9.06 11.69 10.98 11.00 Building skills Headcount (including fixed-term contractors) 40 625 39 601 40 421 42 749 44 772 46 665 48 628 47 658 47 978 46 491 Transformation Socio-economic contribution Corporate social investment committed spend, R million 93.1RA 63.0 RA 75.1RA 67.4RA 123.8 RA 132.4 Q 192.0 RA 225.3 103.6 115.5 Corporate social investment, number of beneficiaries 272 217 438 094 785 085 802 635 1 479 395 933 139 1 116 044 841 845 302 736 323 882 Procurement equity B-BBEE attributable expenditure, R billion 178.8 150.1 134.2 100.4 101.7 84.5 102.3 127.7 125.0 116.0 Black-owned expenditure, R billion 93.3 87.6 83.2 53.8 46.9 52.1 57.6 53.9 52.9 49.4 Black women-owned expenditure, R billion 19.9 14.9 16.4 19.0 15.6 18.8 20.9 19.4 30.8 9.3 Black youth-owned expenditure, R billion 10.9 8.8 9.5 5.4 4.1 3.5 3.9 2.0 1.4 0.9 Procurement from B-BBEE compliant suppliers, %2 74.35 72.80 75.89 64.51 65.97 58.66 80.25 98.25 81.65 89.39 Procurement from black-owned (BO) suppliers, % 38.82 42.48 47.08 34.60 30.38 36.17 45.20 41.49 33.61 34.41 Procurement from black women-owned (BWO) suppliers, % 8.29 7.21 9.26 12.24 10.10 13.07 16.41 14.92 19.30 6.49 Procurement from black youth-owned (BYO) suppliers, % 4.53 4.26 5.40 3.46 2.65 2.41 3.05 1.52 0.94 0.63 Procurement spend with suppliers owned by black persons living with disabilities (BPwD), % of TMPS 0.10 0.18 0.16 0.22 0.17 0.22 0.20 0.02 0.01 0.00 Procurement spend with qualifying small enterprises (QSE), % of TMPS 4.50 4.39 4.91 4.29 4.08 5.17 8.86 8.91 4.62 6.75 Procurement spend with exempted micro enterprises (EME), % of TMPS 4.65 5.86 7.88 8.07 9.77 14.01 10.21 11.24 5.89 5.78 Employment equity Disabilities, number of employees 1 201 1 171 1 188 1 252 1 348 1 416 1 441 1 396 1 311 1 325 Employment equity – disability, % 2.96 2.96 2.94 2.93 3.01 3.03 2.96 2.93 2.73 2.89 Racial equity in senior management, % black employees 78.89 76.92 76.67 73.72 71.00 69.80 68.31 65.80 61.06 61.70 Racial equity in professionals and middle management, % black employees 85.11 83.59 81.68 80.10 78.04 76.22 75.27 73.50 71.68 71.77 Gender equity in senior management, % female employees 42.52 42.01 43.33 41.99 41.73 39.85 38.20 36.58 28.13 29.82 Gender equity in professionals and middle management, % female employees 42.03 40.92 39.91 38.95 38.24 37.89 37.47 35.98 35.11 35.29 1. Financial ratios that were impacted by the restatements in the annual financial statements were restated where applicable. 2. This measure was renamed to “Preferential procurement” in the shareholder compact from 2020. RA Reasonable assurance provided by the independent assurance provider for the respective year. Refer to pages 126 to 127 for the independent sustainability assurance report relating to 2024. Q Qualified by the independent assurance provider for the respective year. 116 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Non-technical statistics: Company Measure and unit 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Finance1 Electricity revenue per kWh (including environmental levy), c/kWh 165.43 141.38 127.32 111.04 101.86 90.01 85.06 83.60 76.24 67.91 Electricity operating costs, R/MWh 1 384.77 1 207.29 992.80 906.36 803.01 729.26 634.69 662.98 628.00 600.72 EBITDA margin, % 14.45 13.65 20.67 15.48 17.65 16.21RA 24.48 20.32 19.13 16.28 EBITDA, R million 42 733 35 428 51 178 31 633 35 199 29 168 43 428 35 989 30 932 23 811 Cash interest cover, ratio 1.19 1.27 1.63 0.81 0.90 0.91RA 1.18 RA 1.73 1.64 1.62 Debt service cover, ratio 0.46 0.56 0.71 0.29 0.49 0.46 0.84 1.37 1.09 0.82 Current ratio 1.12 0.90 0.89 0.94 0.82 0.99 1.04 0.86 0.86 0.82 Gross debt/EBITDA, ratio 11.77 13.69 8.87 14.48 15.22 17.08 10.26 11.39 11.71 13.84 Debt/equity (including long-term provisions), ratio 2.06 2.10 2.00 2.24 2.68 3.50 RA 2.77RA 2.22RA 1.71 2.67 Gearing, % 67 68 67 69 73 78 73 69 63 73 Free funds from operations, R million 53 029 44 941 61 075 41 470 39 465 27 318 39 064 46 336 37 954 36 032 Free funds from operations after net interest paid, R million 18 495 12 466 29 053 4 864 818 (7 897) 8 017 19 776 16 260 20 343 Free funds from operations as % of gross debt, % 10.55 9.26 13.46 9.06 7.37 5.48 RA 8.77RA 11.30 RA 10.48 RA 10.93 Building skills Headcount (including fixed-term contractors) 35 151 34 518 34 690 36 124 37 765 39 292 41 316 41 940 42 767 41 787 Training spend as % of gross employee benefit costs, % 4.19 RA 3.57RA 2.70 RA 2.58 RA 3.67RA 3.85RA 5.21RA 4.89RA 4.45RA 6.18 RA Learner intake – Engineers, number2 184 RA 144 RA 58 RA 0 RA 16RA 10 1 241 1 480 895 1 315 Learner intake – Technicians, number2 184 RA 105RA 51RA 0 RA 11RA 3 838 1 209 415 826 Learner intake – Artisans, number2 173RA 135RA 106RA 0 RA 91RA 0 1 815 2 155 1 955 1 752 Total learner intake (including plant operators and sector-specific)2 806 474 335 0 118 21 726Q 3 048Q 1 370 – Transformation Socio-economic contribution Total number of electrification connections, number3 114 800 RA 102 590 RA 97 947RA 106 669RA 163 613RA 191 585RA 215 519 207 436 158 312 160 933 Procurement equity Local content contracted (Eskom-wide), %4 90.72 87.02 86.89 65.99Q 92.84 Q 91.51RA 87.16RA 73.37Q 75.22Q 25.13 Local content contracted (new build), % 4 97.05 73.08 57.53 56.94 88.53 81.14RA 85.59RA 85.78Q 84.04 RA 33.62LA B-BBEE attributable expenditure, R billion 181.9 152.3 131.4 98.8 97.1 80.3 97.0 137.3 132.0 120.8 Black-owned expenditure, R billion 90.9 83.6 78.6 50.1 43.7 48.8 53.5 50.4 51.0 47.5 Black women-owned expenditure, R billion 18.7 13.2 14.6 17.4 14.6 18.1 19.7 17.3 30.2 8.9 Black youth-owned expenditure, R billion 10.0 7.7 7.9 4.4 3.7 3.1 3.4 1.7 1.3 0.9 Procurement from B-BBEE compliant suppliers, % 5 75.55RA 73.44RA 73.35RA 62.34RA 61.57RA 54.41Q 74.24RA 100.75RA 83.08 RA 88.89RA Procurement from black-owned (BO) suppliers, % 37.76 40.29 43.85 31.62 27.70 33.08Q 40.93RA 36.98 RA 30.98 RA 34.91 Procurement from black women-owned (BWO) suppliers, % 7.75 6.35 8.13 10.98 9.27 12.28Q 15.08 RA 12.67RA 17.72RA 6.61 Procurement from black youth-owned (BYO) suppliers, % 4.15 3.70 4.43 2.76 2.32 2.10 Q 2.58 RA 1.25RA 0.82RA 0.64LA Procurement spend with suppliers owned by black persons living with disabilities (BPwD), % of TMPS 0.09 0.18 0.14 0.15 0.12 0.15Q 0.11RA 0.02RA 0.01RA 0.00 Procurement spend with qualifying small enterprises (QSE), % of TMPS 4.06 3.90 4.01 3.36 3.37 4.47Q 7.80 RA 7.67RA 4.03RA 6.74 Procurement spend with exempted micro enterprises (EME), % of TMPS 4.20 4.73 6.24 6.83 9.12 13.32Q 9.32RA 10.15RA 4.81RA 5.12 Employment equity Disabilities, number of employees 1 092 1 049 1 057 1 113 1 198 1 265 1 292 1 263 1 271 1 294 Employment equity – disability, % 3.11 3.04 3.05RA 3.08 RA 3.16RA 3.22RA 3.13RA 3.01RA 2.97RA 3.12RA Racial equity in senior management, % black employees 78.55 76.38 76.80 RA 73.67RA 70.72RA 69.44RA 67.97RA 65.77RA 60.90 RA 61.58 RA Racial equity in professionals and middle management, % black employees 85.10 83.60 81.71RA 80.18 RA 78.06RA 76.25RA 75.35RA 73.60 RA 71.98 RA 72.28 RA Gender equity in senior management, % female employees 42.90 42.33 43.89RA 42.63RA 41.71RA 39.90 RA 38.25RA 36.69RA 28.07RA 29.83RA Gender equity in professionals and middle management, % female employees 42.71 41.57 40.59RA 39.69RA 38.99RA 38.63RA 38.06RA 36.65RA 36.01RA 36.10 RA 1. Financial ratios that were impacted by the restatements in the annual financial statements were restated where applicable. 5. This measure was renamed to “Preferential procurement” in the shareholder compact from 2020. 2. The definition of learners was changed from 1 April 2018, to account for learners only once when they sign up, and not continuously RA Reasonable assurance provided by the independent assurance provider for the respective year. Refer to pages 126 to 127 for the for the duration of their contract. independent sustainability assurance report relating to 2024. 3. Electrification connections includes farmworker connections. Q Qualified by the independent assurance provider for the respective year. 4. Local content is measured as procurement of locally manufactured/produced goods and services as a percentage of total contracts awarded LA Limited assurance provided by the independent assurance provider for the respective year. for all Eskom company procurement. The definition of local content reported in terms of the shareholder compact in the directors’ report measures local content from designated sectors as a percentage of total contracts awarded for all Eskom company procurement. 117 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Plant information POWER STATION CAPACITIES at 31 March 2024 The difference between installed and nominal capacity reflects auxiliary power consumption and reduced capacity caused by the age of the plant. Number and installed capacity Total installed Total nominal Years commissioned, of generator sets capacity capacity Name of station Location first to last unit MW MW MW Base-load stations Coal-fired (15) 44 598 39 099 Arnot Middelburg Sep 1971 to Aug 1975 6x370 2 220 2 100 Camden1, 3 Ermelo Mar 2005 to Jun 2008 3x200; 1x196; 2x195; 1x190; 1x185 1 561 1 481 Duvha 2 Emalahleni Aug 1980 to Feb 1984 5x600 3 000 2 875 Grootvlei1, 3 Balfour Apr 2008 to Mar 2011 4x200; 2x190 1 180 570 Hendrina3 Middelburg May 1970 to Dec 1976 5x200; 1x195; 1x191; 1x170; 1x167 1 723 1 098 Kendal4 Emalahleni Oct 1988 to Dec 1992 6x686 4 116 3 840 Komati1, 8 Middelburg Mar 2009 to Oct 2013 4x100; 4x125; 1x90 990 – Kriel Bethal May 1976 to Mar 1979 3x430; 3x500 2 790 2 640 Kusile 4 Ogies Aug 2017 to Mar 2021 4x799 3 196 2 880 Under construction 2x800 – – Lethabo Vereeniging Dec 1985 to Dec 1990 6x618 3 708 3 558 Majuba4 Volksrust Apr 1996 to Apr 2001 3x657; 3x713 4 110 3 807 Matimba4 Lephalale Dec 1987 to Oct 1991 6x665 3 990 3 690 Matla Bethal Sep 1979 to Jul 1983 6x600 3 600 3 450 Medupi4, 9 Lephalale Aug 2015 to Jul 2021 5x794; 1x790 4 760 3 600 Tutuka Standerton Jun 1985 to Jun 1990 6x609 3 654 3 510 Nuclear (1) Koeberg Cape Town Jul 1984 to Nov 1985 1x970; 1x964 1 934 1 854 Peaking stations Gas/liquid fuel turbine stations (4) 2 426 2 409 Acacia Cape Town May 1976 to Jul 1976 3x57 171 171 Ankerlig Atlantis Mar 2007 to Mar 2009 4x149.2; 5x148.3 1 338 1 327 Gourikwa Mossel Bay Jul 2007 to Nov 2008 5x149.2 746 740 Port Rex East London Sep 1976 to Oct 1976 3x57 171 171 Pumped storage schemes (3)5 2 732 2 724 Drakensberg Bergville Jun 1981 to Apr 1982 4x250 1 000 1 000 Ingula Ladysmith Jun 2016 to Feb 2017 4x333 1 332 1 324 Palmiet Grabouw Apr 1988 to May 1988 2x200 400 400 Hydroelectric stations (2)6 600 600 Gariep Norvalspont Sep 1971 to Mar 1976 4x90 360 360 Vanderkloof Petrusville Jan 1977 to Feb 1977 2x120 240 240 Total used for capacity management purposes 52 290 46 686 118 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Plant information continued Number and installed capacity Total installed Total nominal Years commissioned, of generator sets capacity capacity Name of station Location first to last unit MW MW MW Renewable energy Wind energy (1)7 Sere Vredendal Mar 2015 46x2.2 100 100 Total capacity including renewable energy 52 390 46 786 Other hydroelectric stations (4)7 61 2 Mbashe 10 Mbashe River 3x14 42 – First Falls10 Umtata River 2x3 6 – Ncora Ncora River 2x0.4; 1x1.6 2 2 Second Falls10 Umtata River 2x5.5 11 – Total Eskom power station capacities (30) 52 451 46 788 Nominal capacity available to the grid – Eskom-owned 89.20% Nominal capacity of Eskom-owned power stations 46 788 Independent power producers (IPP) capacity 7 495 Biomass 25 Concentrating solar power 500 Fossil fuels (STPPP) 160 Gas/liquid fuel 1 005 Hydroelectric 18 Landfill 8 Renewable with battery storage (RMIPPPP) 150 Solar PV energy 2 287 Wind 3 342 Total nominal capacity available to the grid – Eskom and IPPs 54 283 1. Former moth-balled power stations that have been returned to service. The original commissioning dates were: • Camden was originally commissioned between August 1967 and September 1969 • Grootvlei was originally commissioned between June 1969 and November 1977 • Komati was originally commissioned between November 1961 and March 1966 Due to technical and/or financial constraints, some units at these stations have been derated. 2. The Duvha Unit 3 recovery project was cancelled, and the unit removed from the installed base. 3. Certain units are under reserve storage and their capacity removed from the nominal base. 4. Dry-cooled unit specifications based on design back-pressure and ambient air temperature. 5. Pumped storage facilities are net users of electricity. Water is pumped during off-peak periods so that hydroelectricity can be generated during peak periods. 6. Use restricted to periods of peak demand, dependent on the availability of water in the Gariep and Vanderkloof Dams. 7. Installed and operational, but not included for technical performance KPIs. 8. All of Komati’s units have been shut down, with the last unit shut down by 1 November 2022. 9. Medupi Unit 4 has been placed in extended inoperability from 1 October 2022 to 31 August 2024 and has been removed from the nominal base. 10. Small hydro stations were placed in reserve storage from 1 April 2021. 119 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Plant information continued POWER LINES AND SUBSTATIONS IN SERVICE at 31 March 2024 Category 2024 2023 2022 2021 2020 Power lines Transmission power lines, km1 33 328 33 194 33 193 33 158 33 027 765kV 2 784 2 784 2 784 2 784 2 784 533kV DC (monopolar) 1 032 1 032 1 032 1 032 1 032 400kV 20 036 19 916 19 916 19 760 19 743 275kV 7 395 7 395 7 342 7 342 7 228 220kV 1 352 1 352 1 352 1 351 1 351 132kV 728 714 766 889 889 Distribution overhead power lines, km 367 335 363 603 363 286 358 100 351 023 132kV and higher 27 474 27 378 27 265 26 441 24 777 44 to 88kV 2 22 535 22 219 22 359 21 367 20 767 33kV 2 4 061 3 879 3 851 3 730 3 563 1 to 22kV 313 264 310 127 309 811 306 561 301 916 Distribution underground cables, km 8 425 8 376 8 339 8 288 7 734 132kV and higher 70 70 97 97 86 44 to 88kV 2 205 205 215 209 190 33kV 2 330 330 323 323 4 1 to 22kV 7 820 7 771 7 704 7 659 7 454 Total all power lines, km 409 088 405 173 404 818 399 546 391 784 Total transformer capacity, MVA 302 922 301 893 301 381 310 123 306 949 Transmission, MVA 3 155 995 155 820 155 250 154 500 153 135 Distribution and reticulation, MVA 146 927 146 073 146 131 155 623 153 814 Total transformers, number 415 302 415 288 414 568 420 455 391 231 Transmission, number 453 453 451 449 446 Distribution and reticulation, number 414 849 414 835 414 117 420 006 390 785 1. Transmission power line lengths are included as per distances from the Geographic Information System. 2. Under NRS048 part 6, 33kV lines were reclassified in 2019 from high to medium voltage. 3. Base of definition: transformers rated ≥30MVA and primary voltage ≥132kV. 120 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Customer information 1. Prepaid electricity and public lighting are included under the residential category. Category 2024 2023 2022 2021 2020 2. IPP network consumption is included under the industrial category. Number of Eskom customers 3. The short-term energy market consists of all the utilities in the southern African countries that form part of the Southern African Power Pool. Energy is traded on a Distributors 799 799 799 804 805 daily, weekly and monthly basis as there is no long-term bilateral contract. Residential1 7 046 042 6 944 488 6 833 928 6 720 150 6 577 905 4. From 1 April 2022, revenue from the sale of production, while testing generating Commercial 49 968 50 846 52 736 52 880 52 909 plant not yet commissioned, is no longer capitalised to the plant and instead Industrial 2 516 2 560 2 601 2 649 2 684 recognised as revenue in the income statement. The comparative for 2022 was Mining 894 906 926 945 961 restated accordingly. 5. The principle of only recognising revenue if it is deemed collectable at the date Agricultural 71 666 74 608 77 692 79 115 80 451 of sale, as opposed to recognising the revenue and then impairing the customer Rail 400 454 471 475 475 debt when conditions change, has been applied since 2015. External revenue of International 11 11 11 11 11 R17 245 million was thus not recognised at 31 March 2024. 6. Under IFRS 15 Revenue from Contracts with Customers, certain supplies to distributors 7 172 296 7 074 672 6 969 164 6 857 029 6 716 201 were recognised on the cash basis, due to uncertainty around collectability at the Electricity sales per customer category, GWh time of sale. Distributors 76 102 79 480 83 831 82 354 85 898 Residential1 8 559 9 177 10 520 10 949 11 293 Commercial 9 427 9 376 9 872 9 696 10 486 Industrial2 44 231 44 635 45 220 40 973 45 696 Mining 28 072 27 843 28 030 26 991 28 703 Agricultural 4 911 4 785 5 382 5 461 5 770 Rail 1 647 1 668 2 128 1 931 2 600 International 10 362 11 437 13 298 13 497 15 189 183 311 188 401 198 281 191 852 205 635 International sales to countries in southern Africa, GWh 10 362 11 437 13 298 13 497 15 189 Botswana 179 370 851 785 1 261 Eswatini 710 609 713 677 1 011 Lesotho 370 416 341 324 426 Mozambique 7 662 8 228 8 215 8 263 8 358 Namibia 423 622 1 653 1 493 2 013 Zambia 83 25 6 78 238 Zimbabwe 927 1 152 1 456 1 791 1 245 Short-term energy market3 8 15 63 86 637 Electricity revenue per customer category, R million Distributors 124 302 111 414 105 369 90 228 85 656 Residential1 19 317 18 052 18 680 16 924 16 069 Commercial 20 900 17 622 16 723 14 304 14 067 Industrial2 61 367 53 269 48 204 37 026 37 946 Mining 47 923 39 958 36 630 30 708 29 968 Agricultural 13 858 11 660 11 600 10 262 9 839 Rail 3 835 3 374 3 477 2 977 3 323 International 11 457 10 699 11 450 10 383 12 229 Gross electricity revenue 302 959 266 048 252 133 212 812 209 097 Less: Revenue capitalised4 – – – (3 991) (5 683) Less: Revenue not recognised5 (17 245) (15 774) (14 215) (12 112) (10 190) Add: Recognised on the cash basis6 8 347 7 563 6 543 5 935 4 083 Electricity revenue less capitalised revenue per note 31 294 061 257 837 244 461 202 644 197 307 in the financial statements 121 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Environmental implications of using or saving electricity FACTOR 1 Figures are calculated based on total electricity sales by Eskom, which is based on the total available for distribution (including purchases), after excluding losses through Transmission and Distribution (technical losses), losses through theft (non-technical losses), our own internal use and wheeling. Thus to calculate CO2 emissions per MWh, divide the quantity of CO2 emitted by electricity sales: 190.4Mt of CO2 ÷ 183 311GWh sales = 1.04 tons per MWh FACTOR 2 Figures are calculated based on total electricity generated, which includes coal, nuclear, pumped storage, wind, hydro and gas turbines, but excludes the total consumed by Eskom. Thus the quantity of CO2 emissions, divided by (electricity generated less Eskom’s electricity consumption for pumped storage stations): 190.4Mt of CO2 ÷ (184 576GWh generated less 5 710GWh own consumption for pumping) = 1.06 tons per MWh Figures represent the 12-month period from 1 April 2023 to 31 March 2024. Factor 1 Factor 2 If electricity consumption is measured in: (total energy (total energy sold) generated) kWh MWh GWh TWh Coal use 0.54 0.56 kilogram ton thousand tons (kt) million tons (Mt) Water use1 1.42 1.46 litre kilolitre megalitre (Mℓ) thousand megalitres Ash produced 160 164 gram kilogram ton thousand tons (kt) Particulate emissions 0.79 0.81 gram kilogram ton thousand tons (kt) CO2 emissions2 1.04 1.06 kilogram ton thousand tons (kt) million tons (Mt) SOx emissions2 7.81 8.00 gram kilogram ton thousand tons (kt) NO x emissions3 4.01 4.11 gram kilogram ton thousand tons (kt) 1. Volume of water used at all Eskom power stations. 2. Calculated figures based on coal characteristics and power station design parameters. Sulphur dioxide and carbon dioxide emissions are based on coal analysis and using coal burnt tonnages. Figures include coal-fired and gas turbine power stations, as well as oil consumed during power station start-ups and, for carbon dioxide emissions, the underground coal gasification pilot plant. 3. NO x reported as NO2 is calculated using average station-specific emission factors, which have been measured intermittently, and tonnages of coal burnt. Multiply electricity consumption or saving by the relevant factor in the table above to determine the environmental implication. Example 1: Water consumption Example 2: CO2 emissions Using Factor 1 Using Factor 1 Used 90MWh of electricity Used 90MWh of electricity 90 x 1.42 = 127.8 90 x 1.04 = 93.6 Therefore 127.8 kilolitres of water used Therefore 93.6 tons CO2 emitted Using Factor 2 Using Factor 2 Used 90MWh of electricity Used 90MWh of electricity 90 x 1.46 = 131.4 90 x 1.06 = 95.4 Therefore 131.4 kilolitres of water used Therefore 95.4 tons CO2 emitted 122 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Sustainability indicators selected for reasonable assurance Deloitte & Touche has been engaged to provide reasonable assurance on selected sustainability key performance indicators (KPIs) for the year ended 31 March 2024. These KPIs are reported based on internally developed measure specification documents which set out the reporting criteria. These criteria are summarised in the measurement description for each KPI in the table below. All KPIs refer to Eskom company, except for the lost-time injury rate and the financial sustainability measures, which reflect group performance. All but one of the 40 KPIs scoped for reasonable assurance received an unqualified opinion. IR Refer to the independent sustainability assurance report from page 126 for further information The selected KPIs and corresponding performance for the year ended 31 March 2024 are as follows: Key performance indicator Unit of measure Measurement description Actual 2024 Safety Proportional representation of lost-time injuries over 12 months per 200 000 working hours. The measure includes Lost-time injury rate (employees only)SC Rate 0.29RA occupational diseases but excludes third party at fault incidents and all passengers in commuting incidents Generation Measures power station availability, taking account of both planned and unplanned energy losses under the control of Energy availability factor (EAF)SC % 54.56RA plant management, as well as other non-controllable losses Planned capability loss factor (PCLF) % Energy losses due to planned maintenance on power station units, whether due to full shutdowns or partial load reduction 12.04 RA Unplanned capability loss factor (UCLF) % Unplanned losses, whether due to full breakdowns or partial unavailability of plant 32.34 RA Other capability loss factor (OCLF) % Energy losses outside of a station’s control as well as internal non-engineering constraints 1.06RA Unplanned breakdowns of power station units that occur within sixty days after the unit has returned from a planned Post-philosophy outage unplanned capability loss factor (PPO UCLF)SC % 31.61RA philosophy outage Measures readiness for a planned outage three months prior to the breaker being opened; scored on an internal Outage readiness indicator (ORI) at T-3SC % 69.89RA assessment of various indicators Measures boiler tube failures which occur when a boiler tube’s pressure boundary is broken by a leak or rupture, based Boiler tube failure rateSC Rate 2.37RA on number of failures per unit per year Particulate emissions kt The mass of particulates emitted from Eskom’s coal-fired power stations 145.30 RA Relative particulate emissions SC kg/MWh sent out The mass of particulates emitted from Eskom’s coal-fired power stations per unit of energy sent out 0.79RA Specific water usage SC ℓ/kWh sent out The amount of raw water used for power generation per unit of energy sent out 1.43RA Annual average of AEL compliance, scored on an internal assessment of various indicators per power station which Atmospheric emission licence (AEL) complianceSC % considers average emission limit compliance, number of NEMA section 30 incidents, emission monitor status, gaseous 80.20 RA monitor reliability and general AEL compliance Carbon dioxide emissions (from fossil fuel generation) Mt CO2 Tonnage of CO2 emitted through fossil fuel generation 190.4RA Coal purchase Rand/ton % increase SC % Determined by comparing the current average fleet purchase price of coal against the previous year’s actual price 6.6RA Loadshedding and load curtailment to rotate available capacity between all customers when demand is greater than supply Loadshedding implementedSC Number of days 329RA to protect the integrity and stability of the grid to avoid a blackout – RA Generation capacity installed and commissioned (commercial operation)SC MW New power station units installed and commissioned on Eskom’s network Refer to note 1 Transmission Measures the sum of system minutes lost for interruptions on the transmission network. It excludes major incidents with a System minutes lost <1SC Minutes 3.29RA severity of one minute or more Transmission lines installedSC km New high-voltage transmission lines installed on the transmission network 74.4RA Transmission transformer capacity installed and commissioned SC MVA New transformer capacity installed and commissioned at transmission substations 23RA 123 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Sustainability indicators selected for reasonable assurance continued Key performance indicator Unit of measure Measurement description Actual 2024 Distribution System average interruption duration index (SAIDI)SC Hours The average duration of interruptions on the distribution network experienced by customers during a year 34.9RA Losses incurred on the distribution network in the process of receiving energy from the transmission network and supplying energy to Eskom’s end customers. Losses may arise from technical and non-technical reasons. The latter includes losses due to Distribution total energy lossesSC % 9.92RA electricity theft through illegal connections, tampering and bypassing of electricity meters as well as the purchase of electricity tokens from unregistered or illegal vendors. It includes meter reading and billing errors Payment levelsSC % Total payments received on amounts invoiced to customers for electricity consumption, including interest 94.91RA New connections of households and farm dweller houses in Eskom’s licensed areas of supply, funded from Government’s Total electrification connectionsSC Number 114 800 RA electrification programme or directly by Eskom Finance EBITDA SC R million Earnings before interest, tax, depreciation and amortisation 43 410 RA Cash interest cover ratio SC Ratio Operating cash flows available to service net interest on borrowings 1.18 RA Debt service cover ratio SC Ratio Operating cash flows available to service net interest and capital repayments on borrowings 0.46RA Capital, operational or working capital savings arising from cost avoidance and optimisation initiatives, as well as other 9.9Q Savings from turnaround initiativesSC R billion income initiatives, achieved through Eskom’s turnaround plan. Measured as the improvement against an initial baseline Refer to note 2 Human resources New learner intake: artisansSC Number 173RA New learner intake: engineersSC Number 184RA Total number of new learners, including artisans, engineers, technicians and sector-specific learners New learner intake: techniciansSC Number 184RA New learner intake: sector-specificSC Number 265RA Training expenditure as % of budgeted gross employee benefit expenseSC % Training and development cost as a percentage of budgeted gross employee benefit expense 4.19RA Procurement Preferential procurement SC % Procurement of goods and services from B-BBEE compliant suppliers. Calculated as a % of total measurable procurement spend 75.55RA Procurement of locally manufactured and/or produced goods and services from designated sectors as a percentage of Local content SC % 60.34RA total contracts awarded Enterprise development SC R million Value of enterprise development initiatives provided to new and existing black-owned enterprises 6.12RA Supplier development SC R billion Value of initiatives undertaken and contracts awarded or subcontracted to qualifying enterprises 8.31RA Percentage of contracts with an import content of $5 million or more, which leverage Eskom’s procurement to promote National industrial participation programmeSC % 100 RA industrial development and increase the competitiveness, capability and capacity of the local supply base Corporate social investment (CSI) CSI committed spendSC R million Total amount committed or paid towards corporate social investment 93.10 RA Just Energy Transition (JET) Narrative Refer to Repowering and repurposing SC Completion of agrivoltaics, microgrid assembly and training facility at Komati disclosure1 note 3RA Approved partnership strategy SC % Establish suitable partnership mechanisms and develop a partnership strategy to address capital budget constraints 100 RA SC Indicates that a KPI is included in the shareholder compact. RA Reasonable assurance provided by the independent assurance provider. Q Qualified by the independent assurance provider. Refer to the independent sustainability assurance report from page 126 for further information. 1. The “repowering and repurposing” KPI could not be reasonably measured as a percentage and is instead reported as narrative disclosure. 124 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Sustainability indicators selected for reasonable assurance continued Note 1: Generation capacity installed and commissioned Note 2: Savings from turnaround initiatives Note 3: Komati repowering and repurposing On 17 September 2022, the gas air heater (GAH) on Kusile Unit 5 caught Eskom recorded turnaround savings of R9.9 billion for the year against A measure focused on the implementation of repowering and fire while executing the third boiler steam blows, being the last milestone a target of R22.4 billion. The target was set using a baseline and repurposing activities at Komati Power Station was incorporated into activity prior to first synchronisation. As a result, all unit commissioning methodology established in the 2018 financial year. the shareholder compact for the 2024 financial year, which included the activities were discontinued. At that time, eight key commissioning following targets: milestone activities had been successfully achieved. A technical Eskom requested the shareholder to amend the target to R10.5 billion, • Construction and commissioning of the agrivoltaics test facility, investigation was conducted, and the investigation report was finalised in based on a revised methodology using the 2023 financial results as a including raised photovoltaics; construction and commissioning of the February 2023. more reasonable baseline. The revised methodology proposed by Eskom aquaponics system; as well as conducting community training for the intended to cater for the decline in sales, worsening generation plant usage of aquaponics The GAH fire incident significantly impacted the unit commissioning performance, change in production mix (specifically the contribution by • Complete refurbishment of the training centre at Komati Power Station schedule as the GAH had to be fully repaired before commissioning OCGTs and IPPs) and growth in the cost base since the 2018 baseline. and construction of a community training centre outside Komati Power activities, which included plant optimisation and capability tests, could The shareholder denied the request to amend the target for the 2024 Station; obtaining certification from the South African Renewable resume. GAH repairs were completed at the end of August 2023. First financial year, although the revised methodology and baseline has been Energy Technology Centre (SARETEC) for the training programme; synchronisation of the unit to the grid was successfully achieved on applied in the 2025 shareholder compact targets. and conducting community training 31 December 2023. It should be noted that Deloitte has qualified this KPI on the basis that • Establishing the business case for the microgrid assembly Despite the significant schedule delays due to the GAH fire incident, they were not able to substantiate the estimates and judgements applied the shareholder advised Eskom not to submit a second addendum to in management’s estimation of the baseline against which coal savings of The following outcomes have been noted: the shareholder compact for the 2024 financial year. The target for approximately R1.3 billion have been recorded. • The photovoltaic component of the agrivoltaics plant was constructed commercial operation of Kusile Unit 5 was therefore not revised. Instead, and commissioned during the year. Construction of the aquaponics the measure and target were rolled over to the shareholder compact for system was completed in April 2024, after year end. The training of  efer to the qualification contained in the independent sustainability IR R the 2025 financial year. one community member and one Eskom employee on the aquaponics assurance opinion on page 127 for further information system was also concluded. A training provider has been identified, Since year end, commercial operation of Kusile Unit 5 was successfully with procurement of the service provider underway achieved on 30 June 2024, connecting 799MW to the grid. • Refurbishment of the on-site training centre at Komati could not be completed due to a legal intervention required for SARETEC. However, the on-site facility was in a suitable condition to offer training courses to the surrounding community. Similarly, construction of the off-site community training facility could not be completed due to the legal intervention required because SARETEC’s appointed contractor has failed to comply with contractual requirements. Limited community training courses were in place at year end. Further on-site courses are planned for the 2025 financial year and certification of training facilitators is underway • An initial business case was completed for the assembly of containerised microgrids to support Eskom’s electrification programme. Grant funding has been secured by the Development Bank of South Africa for the development of a final business case. Construction of the assembly line was completed during the year and production of microgrid containers commenced in April 2024 125 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Independent sustainability assurance report INDEPENDENT ASSURANCE PRACTITIONER’S Key performance indicator and unit of measure DIRECTORS’ RESPONSIBILITY REASONABLE ASSURANCE REPORT ON SELECTED KEY The directors are responsible for the selection, preparation and PERFORMANCE INDICATORS TO THE DIRECTORS OF Transmission presentation of the selected KPIs in accordance with reporting criteria. ESKOM HOLDINGS SOC LTD System minutes lost <1, minutes This responsibility includes the identification of stakeholders and We have undertaken a reasonable assurance engagement on selected stakeholder requirements, material issues, commitments with respect to Transmission lines installed, km sustainability performance and design, implementation and maintenance key performance indicators (KPIs), as described below, and presented in the integrated report of Eskom Holdings SOC Ltd (Eskom) for Transmission transformer capacity installed and commissioned, MVA of internal controls relevant to the preparation of the integrated report the year ended 31 March 2024. This engagement was conducted by Distribution that is free from material misstatement, whether due to fraud or error. a multidisciplinary team including environmental, safety, social and The directors are also responsible for determining the appropriateness of System average interruption duration index (SAIDI), hours the measurement and reporting criteria in view of the intended users of assurance specialists with relevant experience in sustainability reporting. Distribution total energy losses, % the selected KPIs and for ensuring that those criteria are publicly available SUBJECT MATTER to users. Payment levels, % We have been engaged to provide a reasonable assurance opinion in our report on the following selected KPIs, marked with RA in the integrated Total electrification connections, number OUR INDEPENDENCE AND QUALITY MANAGEMENT report. The selected KPIs described below have been prepared in We have complied with the independence and other ethical Finance accordance with Eskom’s internal reporting guidelines (reporting criteria), requirements of the Code of Professional Conduct for Registered EBITDA, R million Auditors issued by the Independent Regulatory Board for Auditors (IRBA which are set out on pages 123 to 124. Cash interest cover ratio Code), which is founded on fundamental principles of integrity, objectivity, Key performance indicator and unit of measure professional competence and due care, confidentiality and professional Debt service cover ratio behaviour. The IRBA Code is consistent with the corresponding sections Safety Savings from turnaround initiatives, R billion of the International Ethics Standards Board for Accountants’ International Lost-time injury rate (employees only), rate Human resources Code of Ethics for Professional Accountants (including International Independence Standards). Generation New learner intake: artisans, number Energy availability factor (EAF), % New learner intake: engineers, number Deloitte & Touche applies the International Standard on Quality Management 1, which requires the firm to design, implement and Planned capability loss factor (PCLF), % New learner intake: technicians, number operate a system of quality management, including policies or procedures Unplanned capability loss factor (UCLF), %1 New learner intake: sector-specific, number regarding compliance with ethical requirements, professional standards Other capability loss factor (OCLF), %1 and applicable legal and regulatory requirements. Training expenditure as % of budgeted gross employee benefit expense, % Post-philosophy outage unplanned capability loss factor (PPO UCLF), % Procurement ASSURANCE PRACTITIONER’S RESPONSIBILITY Outage readiness indicator (ORI) at T-3, % Our responsibility is to express a reasonable assurance opinion on the Preferential procurement, % selected KPIs based on the procedures we have performed and the Boiler tube failure rate, rate Local content, % evidence we have obtained. We conducted our assurance engagement in Particulate emissions, kt1 Enterprise development, R million accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised), Assurance Engagements Other than Audits or Relative particulate emissions, kg/MWh sent out Supplier development, R billion Reviews of Historical Financial Information, issued by the International Specific water usage, ℓ/kWh sent out National industrial participation programme, % Auditing and Assurance Standards Board. This standard requires that we Atmospheric emissions licences (AEL) compliance, % Corporate social investment (CSI) plan and perform our engagement to obtain reasonable assurance about whether the selected KPIs are free from material misstatement. Carbon dioxide emissions (from fossil fuel generation), MtCO2 CSI committed spend, R million Coal purchases Rand/ton % increase, % A reasonable assurance engagement undertaken in accordance with ISAE Just Energy Transition (JET) 3000 (Revised) involves performing procedures to obtain evidence about Loadshedding implemented, number of days Repowering and repurposing, narrative disclosure1 the measurement of the selected KPIs and related disclosures in the Generation capacity installed and commissioned (commercial operation), MW Approved partnership strategy, %1 integrated report. The nature, timing and extent of procedures selected depend on the auditor’s professional judgement, including the assessment 1. We were not required to provide assurance on these selected KPIs in the prior year. of the risks of material misstatement of the selected KPIs, whether due to fraud or error. 126 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Independent sustainability assurance report continued In making those risk assessments we have considered internal controls RESTRICTION OF LIABILITY relevant to Eskom’s preparation of the selected KPIs. A reasonable Our work has been undertaken to enable us to express a reasonable assurance engagement also includes: assurance opinion on the selected KPIs to the directors of Eskom in • Evaluating the appropriateness of quantification methods, reporting accordance with the terms of our engagement, and for no other purpose. policies and internal guidelines used and the reasonableness of We do not accept or assume liability to any party other than Eskom, for estimates made by Eskom our work, for this report, or for the conclusion we have reached. • Assessing the suitability in the circumstances of Eskom’s use of the REPORT ON OTHER LEGAL AND REGULATORY applicable reporting criteria as a basis for preparing the selected information REQUIREMENTS In accordance with our responsibilities in terms of sections 44(2) and • Evaluating the overall presentation of the selected sustainability 44(3) of the Auditing Profession Act, 2005, we report that we have performance information identified a reportable irregularity in terms of the Auditing Profession We believe that the evidence we have obtained is sufficient and Act. We have reported this matter to IRBA. The matter pertaining to the appropriate to provide a basis for our qualified opinion. reportable irregularity has been described in item 1 of note 52 of Eskom’s annual financial statements for the year ended 31 March 2024. BASIS FOR QUALIFIED OPINION Included in the “Savings from turnaround initiatives” reported of R9.9 billion is an amount of R1.3 billion as a cost saving initiative measuring the actual cost per ton incurred for uncontracted coal supplied to generation facilities compared to the budgeted cost per ton established as part of the baseline for measurement of this initiative. Management Deloitte & Touche determined the baseline cost per ton based on available market Registered Auditors information and management’s estimate of coal grading and movement Per Jyoti Vallabh in export coal markets as at December 2022. We were unable to obtain Chartered Accountant (SA) sufficient and appropriate audit evidence to substantiate management’s Registered Auditor estimation of the baseline and were unable to do so by alternative means. Partner Consequently, we were unable to determine whether any adjustments 18 December 2024 were needed to the “Savings from turnaround initiatives” KPI reported. 5 Magwa Crescent QUALIFIED REASONABLE ASSURANCE OPINION Waterfall City, Waterfall In our opinion, except for the possible effects of the matter referred to Private Bag X6, Gallo Manor, 2052 in the “Basis for qualified opinion” paragraph above, the selected KPIs South Africa as set out in the “Subject matter” paragraph above for the year ended 31 March 2024 are prepared, in all material respects, in accordance with the reporting criteria. OTHER MATTERS Our report includes the provision of reasonable assurance on selected KPIs, as indicated in the “Subject matter” paragraph above, on which we were previously not required to provide assurance. The maintenance and integrity of Eskom’s website is the responsibility of Eskom’s management. Our procedures did not involve consideration of these matters and, accordingly, we accept no responsibility for any changes to either the information in the integrated report or our independent reasonable assurance report that may have occurred since the initial date of its presentation on Eskom’s website. 127 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Disclosure of information under the PFMA Section 55(2)(b)(i) of the Public Finance Management Act, 1999 (PFMA) regular basis in accordance with the Compliance Risk Monitoring Plan. We TENDER PROCESSES NOT ADHERED TO AND INSUFFICIENT requires that the particulars of any irregular expenditure, any fruitless have identified gaps and areas where PFMA compliance has been a challenge DELEGATION OF AUTHORITY and wasteful expenditure as well as material losses due to criminal and will continue to analyse the root causes of non-compliance to address Irregular expenditure was incurred where incorrect tender processes conduct be disclosed in an entity’s annual financial statements and them effectively. We are enhancing our detailed action plan to address the were followed and/or transactions were executed without the annual report. The National Treasury Instruction 4 of 2022/23 on PFMA qualification to include clear objectives, timelines and responsible individuals appropriate approvals. Compliance and Reporting Framework, effective from 3 January 2023, or teams, the progress of which is monitored regularly. was applied in this regard when compiling the disclosure in Eskom’s MODIFICATIONS EXCEEDING ALLOWED AMOUNTS annual financial statements and integrated report. The instruction applies From an improvement perspective, it is imperative to align Eskom’s PFMA National Treasury required that their approval be obtained for to all departments, trading entities, constitutional institutions and public procedures and processes with changing regulations and best practice. any modification made to an original contract from 1 May 2016 to entities listed in Schedules 2 and 3 to the PFMA. Eskom’s process instruction on the treatment of irregular expenditure 1 April 2022 where the value of the modification was more than 20% has been implemented, together with awareness sessions. The process of the contract or purchase order value or R20 million for construction- The instruction requires that detailed information be reported in the instruction on the treatment of fruitless and wasteful expenditure is at related goods, works or services, and 15% of the contract or purchase integrated report, whereas only expenditure relating to the current an advanced stage. PFMA awareness and training sessions will continue order value or R15 million for all other goods or services. The group and comparative financial years be reported in the annual financial to be rolled out to enhance understanding among employees of their did not initially comply with this requirement predominately due to a statements. The instruction further requires reporting inclusive of responsibilities as well as the importance of PFMA compliance, while also misinterpretation of the instruction note. The requirement to obtain value-added tax (VAT). Eskom has historically reported all amounts communicating key changes in the process. A dedicated communication National Treasury approval for these transactions has since been repealed excluding VAT and has continued to do so in the current year, due to the channel has been created to enhance communication with the business at through the PFMA Supply Chain Management (SCM) National Treasury impracticability of recalculating amounts, particularly on opening balances large on PFMA-related matters. Instruction Note 3 of 2021/2022, effective from 1 April 2022. Deviations, and multi-year contracts that continued to incur expenditure in the expansions and variations of contracts are reported to National Treasury current and comparative years. Eskom will continue to seek ways to enhance and strengthen internal on a monthly basis. controls to improve PFMA compliance. These measures are aimed at The group is further required to report quarterly to National Treasury fostering a culture of transparency and accountability within Eskom while on current and historical irregular expenditure and fruitless and wasteful ensuring that individuals responsible for PFMA non-compliance are held  efer to page 134 for a summary of deviations, expansions and variations IR R expenditure that has not been fully addressed. accountable for their actions. during the past year The external auditor’s report for the 2023 financial year was qualified as it related to disclosures in the annual financial statements of irregular AFS Refer to note 51 in the annual financial statements for further TAX NON-COMPLIANCE information The Preferential Procurement Policy Framework Act, 2000 (PPPFA) expenditure, fruitless and wasteful expenditure and losses due to criminal regulations stipulate that suppliers must be compliant with SARS conduct. Furthermore, the prior year auditor’s report called out material regulations. findings in Eskom’s compliance with specific matters and key legislation, IRREGULAR EXPENDITURE as well as significant internal control deficiencies. Eskom has once again Irregular expenditure is defined as expenditure, other than unauthorised USE OF SOLE SOURCE received a qualified opinion relating to the quantification and disclosure expenditure, incurred in contravention of or not in accordance State-owned entities are required to procure goods and services in a of information required in terms of the PFMA, as associated financial with a requirement of any applicable legislation. The scope includes manner that is fair, equitable, transparent, competitive and cost-effective. records were not complete or accurately maintained in line with legislative transgressions of any laws or regulations regardless of whether the Expenditure was incurred on contract awards which did not meet the requirements. The auditors have raised material findings in respect of the expenditure was justified from a business perspective, value was National Treasury requirements for limited bidding, where contracts lack of completeness and accuracy of Eskom’s reported PFMA information, received, the breaches were deliberate or accidental, or the breaches were incorrectly awarded to predetermined suppliers. Sole source both relating to the current year and the cumulative balance. happened unknowingly or in good faith. requests are now scrutinised to confirm compliance with criteria before approval through the relevant governance processes. Irregular expenditure is incurred when the related transaction is  efer to the “Report on the audit of the consolidated and separate AFS R financial statements – Basis for qualified opinion” and “Other recognised in terms of International Financial Reporting Standards (IFRS). The requirement to obtain National Treasury approval for these information” in the independent auditor’s report in the financial The irregular expenditure is removed from the cumulative balance transactions has since been repealed through the PFMA SCM National statements for further information through a process of condonation by the relevant authority, removal of Treasury Instruction Note 3 of 2021/2022. All procurement through matters not condoned, recovery of losses or write-off of irrecoverable other means is reported to National Treasury within 14 days of losses. Irregular expenditure is reported in the following categories: transaction approval. Eskom continues to actively seek ways to enhance PFMA compliance through a proactive and effective approach to address PFMA audit qualifications, BREACH OF MORE THAN ONE LEGISLATIVE REQUIREMENT which requires a multi-year approach due to the impact of the PFMA on the In certain instances, transgression of more than one legislative  efer to page 134 for a summary of deviations during the past year IR R entire business. The organisation's PFMA compliance status is assessed on a requirement was identified. 128 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Disclosure of information under the PFMA continued CONTRACTS AWARDED WITHOUT FOLLOWING CIDB IRREGULAR EXPENDITURE REQUIREMENTS Not The group did not always comply with the Construction Industry Opening condoned Development Board (CIDB) regulations regarding the advertising of balance Total and Closing tenders, grading of contractors and publishing of awards. Description, R million restated Confirmed incurred Condoned removed Recovered balance PPPFA: INCORRECT TENDER PROCESS APPLIED 2024 The PPPFA requires that the preferential points calculation is determined inclusive of VAT. Certain procurement was incorrectly done where the Breach of more than one legislative requirement 49 579 3 272 52 851 (110) – (500) 52 241 preferential points calculation was determined exclusive of VAT. Tender processes not adhered to and insufficient 22 787 1 130 23 917 (828) – – 23 089 delegation of authority INCORRECT CLASSIFICATION AS EMERGENCY OR URGENT PROCUREMENT Modifications exceeding allowed amounts 8 604 17 8 621 – – – 8 621 Irregular expenditure was incurred where emergency purchases did Tax non-compliance 5 724 239 5 963 (124) – – 5 839 not meet the National Treasury requirements for emergency or urgent procurement. Use of sole source 5 030 12 5 042 – – – 5 042 Contracts awarded without following CIDB The requirement to obtain National Treasury approval for these requirements 1 240 15 1 255 – – – 1 255 transactions has since been repealed through the PFMA SCM National Treasury Instruction Note 3 of 2021/2022. All procurement through PPPFA: Incorrect tender process applied 882 – 882 – – – 882 other means is reported to National Treasury within 14 days of Incorrect classification as emergency or urgent transaction approval. 647 – 647 (17) – – 630 procurement Expenditure not in accordance with other National IR Refer to page 134 for a summary of deviations during the past year 609 – 609 – – – 609 Treasury instructions Designated sectors 428 – 428 (80) – – 348 EXPENDITURE NOT IN ACCORDANCE WITH OTHER Other 67 53 120 – – – 120 NATIONAL TREASURY INSTRUCTIONS Non-compliance with National Treasury Instructions, unrelated to supply Total 95 597 4 738 100 335 (1 159) – (500) 98 676 chain management instructions which are reflected in other disclosure Note 1 Note 3 Note 3 Note 3 categories. DESIGNATED SECTORS Where local production and content is of critical importance in the award of tenders in designated sectors, such tenders must be advertised with a specific tendering condition that only locally produced goods, services or works or locally manufactured goods that meet the stipulated minimum threshold for local production and content will be considered. Contracts were awarded to suppliers despite them having declared a local content threshold that was below the required stipulated threshold as per the Department of Trade, Industry and Competition’s list of designated materials. 129 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Disclosure of information under the PFMA continued Confirmed Condoned, 1. Current year expenditure Prior and removed Description, R million Note 2024 2023 Opening period As disclosed Prior year Restated Total and Closing Description, R million balance errors restated 2023 errors 2023 incurred recovered balance Expenditure confirmed in the (a) 4 738 5 030 current year 2023 Prior year errors for 2023 expenditure Note 2 – 2 518 Breach of more than one 43 884 986 44 870 3 751 958 4 709 49 579 – 49 579 Total current year expenditure 4 738 7 548 legislative requirement Tender processes not (a) Expenditure for the current year adhered to and insufficient 19 814 1 194 21 008 729 1 297 2 026 23 034 (247) 22 787 delegation of authority Expenditure of R361 million incurred in 2024 relates to new matters. The remaining amount incurred in 2024 relates to existing multi-year Modifications exceeding contracts that will continue to attract irregular expenditure until 8 967 (498) 8 469 138 (3) 135 8 604 – 8 604 allowed amounts condoned, of which R2 683 million relates to incidents relating to Tax non-compliance 5 289 87 5 376 142 207 349 5 725 (1) 5 724 the non-application of the requirements of the National Industrial Participation Programme (NIPP) which occurred in 2023. Use of sole source 4 891 34 4 925 108 (3) 105 5 030 – 5 030 Contracts awarded without The group reported 97 incidents where expenditure was incurred in following CIDB 1 164 13 1 177 47 16 63 1 240 – 1 240 2024, 43 of which related to non-compliances that occurred in 2024 requirements and 54 relating to continuing spend on multi-year contracts where the transgression took place in previous years. PPPFA: Incorrect tender 880 – 880 2 – 2 882 – 882 process applied 2. Prior period errors Incorrect classification as 2023 emergency or urgent 647 4 651 – – – 651 (4) 647 2023 opening procurement Description, R million expenditure balance Expenditure not in accordance with other Total prior year errors 2 518 1 928 498 111 609 – – – 609 – 609 National Treasury instructions There were restatements to the 2024 opening balance on Designated sectors 313 1 314 113 1 114 428 – 428 264 matters, the net effect of which is an increase of R4 446 million, comprising restatements to 2023 expenditure of R2 518 million Other 26 (4) 22 – 45 45 67 – 67 and R1 928 million to the 2023 opening balance. In addition to Total 86 373 1 928 88 301 5 030 2 518 7 548 95 849 (252) 95 597 corrections to amounts previously disclosed, irregular expenditure that relates to years prior to 2024 which was concluded and Note 2 Note 1 Note 3 quantified in the current year are disclosed as prior period errors in compliance with National Treasury Instruction Note 4 of 2022/23. 3. Irregular expenditure condoned, recovered, removed and written off Forty-five matters to the value of R1 159 million were condoned during the financial year (2023: 11 matters of R246 million). A total of R500 million was recovered on two matters (2023: one matter of R4 million). No irregular expenditure that was not condoned was removed during the year (2023: one matter of R2 million). One matter amounting to approximately R120 000 that was not recovered was written off (2023: none). 130 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Disclosure of information under the PFMA continued Details of current and previous year irregular expenditure (under Disciplinary action is pending or in progress for 42 incidents incurred in 2024, and 45 incidents for continuing spend in 2024. There are also 88 pending assessment, determination and investigation) matters for 2023, and 35 for multi-year contracts that ended in 2023. Description, R million Note 2024 2023 In some instances, no disciplinary sanction was issued due to various reasons, including where the responsible employees left the organisation; disciplinary action was deemed not appropriate and other corrective action was applied; or the employee was found not guilty during the disciplinary Irregular expenditure under Note 4 498 1 070 process. This was the case in four incidents with continuing spend in 2024, five matters in 2023, and five for multi-year contracts that ended 2023. assessment or determination Irregular expenditure under FRUITLESS AND WASTEFUL EXPENDITURE Note 5 – 279 investigation Opening Total Written Closing Total 498 1 349 Description, R million balance Confirmed incurred Recovered off balance 2024 4. Irregular expenditure under assessment or determination It should be noted that figures disclosed are estimated. Quantification Project management 3 625 – 3 625 – – 3 625 of actual irregular expenditure incurred takes place during the Procurement and contract management 1 627 – 1 627 – (1) 1 626 assessment and determination process. Irregular expenditure under assessment or determination at year end relating to prior period Interest and penalties 9 – 9 – (1) 8 incidents is estimated at R1 578 million. Other 794 1 795 (1) – 794 5. Irregular expenditure under investigation Total 6 055 1 6 056 (1) (2) 6 053 If a suspicion of fraudulent, corrupt or other criminal conduct arises Note 1 Note 3 Note 3 during the assessment and determination phase, the matter is referred to a mandated investigative function. In certain instances, Confirmed the suspected criminal conduct does not stem from the assessment and Restated and determination process, such as matters that are directly Opening Prior period As disclosed Prior year 2023 Total Closing reported to the Forensic and Anti-Corruption Department or other Description, R million balance errors restated 2023 errors expenditure incurred Recovered balance investigative units. Irregular expenditure under investigation relating 2023 to prior periods is estimated at R178 million (2023: R4 million). Project management 4 231 (644) 3 587 102 (63) 39 3 626 (1) 3 625 Details of current and previous year disciplinary action or criminal Procurement and contract steps taken as a result of irregular expenditure 1 621 4 1 625 – 2 2 1 627 – 1 627 management Warnings were issued on one new incident relating to 2024, and four warnings were issued on incidents with continuing spend on multi- Interest and penalties 11 (2) 9 – – – 9 – 9 year contracts where the transgression took place in previous years. Other 799 (7) 792 3 – 3 795 (1) 794 Expenditure in 2023 resulted in nine warnings, and 14 for multi-year contracts that ended in 2023. Total 6 662 (649) 6 013 105 (61) 44 6 057 (2) 6 055 Note 2 Note 2 Note 1 Note 3 A sanction of suspension without pay was issued on one matter relating to 2023 continuing expenditure. One employee was dismissed for an incident with continuing spend in 2024. 131 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Disclosure of information under the PFMA continued 1. Current year expenditure 4. Fruitless and wasteful expenditure under assessment or Losses incurred determination Description, R million Note 2024 2023 Description, R million Note 2024 2023 It should be noted that figures disclosed are estimated. Quantification Expenditure confirmed in the of actual fruitless and wasteful expenditure incurred takes place Estimated non-technical energy losses (a) 6 441 5 607 (a) 1 105 current year during the assessment and determination process. Fruitless and Theft of conductors, cabling and wasteful expenditure under assessment or determination at year end (b) 120 197 Prior year errors for 2023 expenditure Note 2 – (61) network-related equipment relating to prior periods is estimated at R3 499 million, of which 76% Total current year expenditure 1 44 relates to a compensation event for delays on the Koeberg steam Fraud and corruption (c) 64 81 generator replacement project. Malicious damage to property (b) 67 122 (a) Expenditure for the current year Fruitless and wasteful expenditure incurred in 2024 comprises 5. Fruitless and wasteful expenditure under investigation Common theft (b) 26 – 12 incidents (2023: 29 incidents, restated). If a suspicion of fraudulent, corrupt or other criminal conduct Attempted theft (b) – 25 arises during the assessment and determination phase, the 2. Prior period errors matter is referred to a mandated investigative function. In certain Total material losses 6 718 6 032 instances, the suspected criminal conduct does not stem from the 2023 assessment and determination process, such as matters that are Losses recovered 2023 opening directly reported to Forensic and Anti-Corruption Department or Description, R million expenditure balance Description, R million Note 2024 2023 other investigative units. Fruitless and wasteful expenditure under Total prior year errors (61) (649) investigation on two events relating to prior periods is estimated at Estimated non-technical energy losses 229 225 an immaterial amount. Theft of conductors, cabling and There were restatements to the 2024 opening balance on 3 9 Details of current and previous year disciplinary action or criminal network-related equipment 112 matters, the net effect of which is a decrease of R710 million, steps taken as a result of fruitless and wasteful expenditure Fraud and corruption 1 – comprising a reduction in 2023 expenditure of R649 million and a reduction of R61 million to the 2023 opening balance. In addition to Written warnings were issued in six matters incurred in 2023. Malicious damage to property 13 – corrections to amounts previously disclosed, fruitless and wasteful Disciplinary action is pending or in progress for 12 incidents for 2024 expenditure that relates to years prior to 2024 which was concluded and 18 matters relating to 2023. Common theft 2 – and quantified in the current year are disclosed as prior period Attempted theft – 1 There were four matters relating to 2023 where no disciplinary errors in compliance with National Treasury Instruction Note 4 of action was taken due to various reasons, including where the Total recoveries on material 2022/2023. (d) 248 235 responsible employees left the organisation; disciplinary action was losses 3. Fruitless and wasteful expenditure recovered or written off deemed not appropriate and other corrective action was applied; or the employee was found not guilty during the disciplinary process. Recoveries were achieved on 51 matters of approximately (a) Estimated non-technical energy losses R1.4 million during the financial year, either partial or in full MATERIAL LOSSES THROUGH CRIMINAL CONDUCT Non-technical energy losses relate to losses due to electricity theft (2023: 53). Losses on 26 matters of approximately R2.4 million Material losses caused by criminal conduct and any disciplinary, civil or through illegal connections, tampering and bypassing of electricity were written off as irrecoverable (2023: 22). criminal action taken in respect of such losses are reported in terms of meters, as well as the purchase of electricity tokens from unregistered the Significance and Materiality Framework as previously agreed with the or illegal vendors. The management of non-technical losses focuses Details of current and previous year fruitless and wasteful on ensuring that all energy supplied is accounted for, and includes shareholder representative. expenditure (under assessment, determination and investigation) initiatives to minimise non-technical energy losses. The reported losses represent the estimated cost of non-technical energy lost. Description, R million Note 2024 2023 Fruitless and wasteful expenditure Non-technical energy losses are determined by applying a scientific Note 4 4 644 265 approach to measure total energy losses as the difference between under assessment or determination energy produced and energy sold. Technical energy losses are Fruitless and wasteful expenditure Note 5 – – derived based on known factors of the electrical grid such as under investigation conductor resistance, as well as transformer and equipment losses. Total 4 644 265 The residual of total losses is attributed to non-technical losses. 132 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Disclosure of information under the PFMA continued (b) Theft of conductors, cabling and network-related equipment, • Minimising breaches that allow easy access to sites and assets (c) Fraud and corruption malicious damage to property, common and attempted theft by improving housekeeping, appropriate storage of material and Eskom concluded 26 investigations into fraud during the year Theft of network-related equipment includes theft of cable, including equipment with well-functioning delay and deterring solutions to (2023: 56). The internal control measures in the affected areas have airdac, batteries, tower members and transformers. prevent or minimise the impact been reviewed and enhancements recommended for implementation • Deploying robust security systems that can detect and prevent to the accountable line managers. This includes improving controls, Unlawful and intentional damage to property belonging to another crime and provide evidence that can be used for disciplinary or and instituting disciplinary, criminal or civil proceedings against those is reported as malicious damage to property. Vandalism is the action criminal proceedings involved. involving deliberate destruction of or damage to public or private • Ensuring consistent and continuous screening and vetting of property. Damage towards any property without permission of the (d) Losses through criminal conduct recovered contractors and staff to prevent and minimise insider threat owner is reported as vandalism. Eskom recovered R248 million of material losses due to criminal involvement and collusion conduct (2023: R235 million). Most of the value relates to non- Common theft consists of the unlawful appropriation of movable • Making arrests and working with relevant role players to build technical energy losses. Eskom invoiced R307 million of additional property belonging to another with the intent to deprive the owner strong cases and dockets leading to convictions revenue during the year (2023: R346 million), of which R229 million permanently of the property. Property includes laptops, tools, has been received (2023: R225 million). cell phones, equipment, air conditioners and all other items not included in the list of Eskom essential infrastructure or security crime categories. The losses incurred in 2023 due to criminal conduct relating to this category were below the materiality threshold. Attempted theft is defined as an attempted crime or unlawful action, which is an unsuccessful effort to commit crime or carry out the action, such as an attempt to steal something but not succeeding or being prevented. The losses incurred in 2024 due to criminal conduct relating to this category were below the materiality threshold. Actions to combat losses through criminal conduct are managed in collaboration with other affected state-owned entities, industry role players, law enforcement and criminal justice agencies such as SAPS, the NPA, etc. Some of the initiatives being pursued include but are not limited to the following: • Realigning of security contracts (scope and resources) and optimisation of deployment • Improving the Eskom asset disposal process and strategies • Focusing on asset management and protection, through research and implementation of innovative solutions, such as unique marking and tracking capabilities • Implementing policy and legislative changes to address scrap and market regulations • Introducing integrated, intelligent and smart security technologies and systems to reduce dependence on the human factor, such as the use of drones, intelligent cameras and alarm systems • Implementing focused strategies and projects aimed at combatting revenue loss, through metering, vending, tampering, disruptive operations, etc. 133 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Expansions and deviations reported to National Treasury To enhance compliance, transparency and accountability in Supply Chain DEVIATIONS AND PROCUREMENT BY OTHER MEANS TRANSMISSION DEVIATIONS Management (SCM), National Treasury issued PFMA SCM Instruction The figure below depicts the number of deviations per division for the A sizable portion of the Transmission spend can be attributed to the Note 3 of 2021/2022, effective from 1 April 2022. This instruction note 2024 financial year. following: introduced changes in procurement practices, including provisions for • A substantial portion of the total value, amounting to R67.24 billion, handling deviations from competitive bidding and for expanding and varying 954 relates to eight IPP transactions under short-term purchase contracts. The mechanisms include deviations from the normal bidding programmes. These programmes include the Standard Offer and the process, such as written price quotations not within National Treasury Emergency Generation Programme thresholds or those prescribed in the institution's SCM Policy, procurement • Three contracts valued at R260.69 million were concluded for the in urgent or emergency situations, and limited bidding, which includes sole, utilisation of National Treasury transversal contracts to procure fleet single or limited source procurement. These mechanisms must be seen as vehicles the exceptions for procurement, not the norm. • A contract worth R8 billion was concluded with ERI for substation and Under the instruction note, state-owned enterprises are authorised to line work as part of the Transmission Development Plan over the next internally approve these procurement mechanisms, whereafter reports decade must be submitted to both National Treasury and the Auditor-General • Transmission also had emergencies valued at R94.98 million of South Africa (AGSA). Eskom understands that these transactions must comply with Section 217 of the Constitution of the Republic of South 69 50 39 GENERATION EXPANSIONS AND VARIATIONS 13 8 Generation reported expansions and variations of R28.02 billion. Africa, 1996, which mandates that state-owned entities procure goods ion sio n tio n IT tal ica l Significant portions include: and services in a manner that is fair, equitable, transparent, competitive nerat mis ibu rate api act ns tr c t • A modification of R4.20 billion for coal supply to Matla Power Station and cost-effective. Consequently, Eskom's supply chain procedures have Ge Tra Dis rpo oup r ate been amended to include provisions for monitoring and reporting these Co Gr rpo and other designated sites Co transactions, and the necessary training was provided to the business. • A modification of R3.6 billion with DWS for the Vaal River Eastern Sub-System Memorandum of Agreement Each method has specific reporting deadlines: deviations must be Out of 774 urgent transactions, Generation executed 92%, Distribution • A modification of R17.33 billion for the continuation of the cost-plus reported within 14 days of procurement finalisation, while contract 6% and Transmission 2%. coal supply agreement for Matla Power Station expansions and variations are reported monthly. Eskom regularly reports to National Treasury upon concluding such transactions, as required by Following clarification from National Treasury, transactions involving GENERATION DEVIATIONS the instruction note. National Treasury, in turn, reports across state- independent power producers (IPPs) are now included in the reporting Generation reported deviations valued at over R25 billion, including: owned entities on a quarterly basis. process. Additionally, transactions previously categorised under "informal • Emergencies valued at R153.45 million tendering" (for values not exceeding R1 million, excluding VAT) have been Following the enactment of PFMA SCM Instruction Note 3 of 2021/2022, excluded from the count and value of figures reported due to an error in • Sole source transactions valued at R6.04 billion no delays have been attributed to bottlenecks in procurement the NT Instruction Note. • Single source transactions valued at R7.75 billion mechanisms or processes, as the authority to approve deviations and • Closed tenders valued at R516.17 million contract modifications lies within the business. ANALYSIS OF TRENDS The following divisional reporting trends have been identified: The number of contracts and amounts per division for deviations are In accordance with the stipulations outlined in the instruction note, • The number of transactions increased by 77% from the previous year, set out below, broken down by contract currency, with the total Rand divisions have reported a total of 1 555 transactions during the 2024 in response to measures to improve the reliability, availability and amount also being shown. financial year. Of these, 1 133 were classified as deviations from the safety of power stations normal bidding process, while 422 were identified as expansions and • The number of deviations increased by 87% year-on-year variations of contracts. The total value of all transactions amounts to over • The number of expansions and variations increased by 54% year-on-year R140.6 billion for the year. • The value of deviations increased by 688% compared to the previous year • The value of expansions and variations decreased by 31% year-on-year 134 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Expansions and deviations reported to National Treasury continued Deviations for the 2024 financial year Division No Rand amounts USD amounts Euro amounts GBP amounts SEK amounts Generation 954 25 004 373 410.79 51 853 383.28 99 590.30 213 512.00 Transmission 69 75 794 168 522.78 4 957 433.00 Distribution 50 548 678 923.86 Group Capital 13 1 291 721 365.46 Corporate IT 39 2 755 140 153.57 1 765 112.00 401 220.00 Corporate Tactical 8 16 218 616.12 Total 1 133 R105 410 300 992.58 $53 618 495.28 €500 810.30 £213 512.00 SEK4 957 433.00 Average exchange rate 1.00 18.91 19.58 23.94 1.76857 Converted Rand value R105 410 300 992.58 R1 013 925 745.74 R9 805 865.67 R5 111 477.28 R8 767 567.28 Total Rand value of all transactions R106 447 911 648.55 Deviations for the 2023 financial year Division No Rand amounts Euro amounts Generation 447 11 804 011 569.43 11 871 240.00 Transmission 60 99 056 236.91 – Distribution 79 555 379 523.19 – Group Capital 7 322 049 460.42 – Corporate 13 591 547 142.61 – Total 606 R13 372 043 932.56 €11 871 240.00 Average exchange rate 1.00 17.69 Converted Rand value R13 372 043 932.56 R210 002 235.60 Total Rand value of all transaction R13 582 046 168.16 135 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Expansions and deviations reported to National Treasury continued CONTRACTUAL AGREEMENT EXPANSIONS AND VARIATIONS The figure below depicts the number of expansions and variations per The number of contracts and amounts per division for expansions and variations are set out below, broken down by contract currency, with the total division for the 2024 financial year. Rand amount also being shown. 220 Expansions and variations for the 2024 financial year Division No Rand amounts Euro amounts USD amounts Generation 220 28 020 841 528.66 22 377 291.92 3 436 259.20 Transmission 41 924 237 163.78 Distribution 65 1 252 031 894.30 65 Group Capital 55 1 180 791 204.25 55 41 Corporate IT 28 2 225 537 250.95 1 445 558.49 28 13 Corporate Tactical 13 22 916 614.46 n n l on l Total 422 R33 626 355 656.40 €22 377 291.92 $4 881 817.69 atio tio pita issi IT ica r ibu Ca te act Gene istr p a nsm p ora t eT Average exchange rate 1.00 19.58 18.91 D rou T r Co r r a G rpo Co Converted Rand value R33 626 355 656.40 R438 147 375.79 R92 315 172.52 Total Rand value of all transaction R34 156 818 204.71 Expansions and variations for the 2023 financial year Division No Rand amounts Euro amounts USD amounts Yen amounts Generation 137 45 925 739 318.67 3 593 027.04 13 734.00 248 615 944.00 Transmission 18 43 785 271.61 – – – Distribution 50 1 308 510 096.28 – – – Group Capital 37 938 972 631.50 – – – Corporate 32 430 686 644.15 14 700.00 – – Total 274 R48 647 693 962.51 €3 607 727.04 $13 734.00 JPY248 615 944.00 Average exchange rate 1.00 17.69 17.02 0.1255 Converted Rand value R48 647 693 962.51 R63 820 691.34 R233 752.68 R31 201 300.97 Total Rand value of all transaction R48 742 949 707.50 136 ESKOM HOLDINGS SOC LTD Integrated report 2024 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information Company information ESKOM HOLDINGS SOC LTD Incorporated in the Republic of South Africa Registration number 2002/015527/30 REGISTERED OFFICE Eskom Megawatt Park 2 Maxwell Drive Sunninghill Sandton 2157 PO Box 1091 Johannesburg 2000 Switchboard +27 11 800 8111 Customer call centre 08600 ESKOM or 08600 37566 DEBT SPONSOR Nedbank Corporate and Investment Banking, a division of Nedbank Limited JSE alpha code BIESKM FOR MORE INFORMATION INVESTOR RELATIONS Lerato Mashinini InvestorRelations@eskom.co.za MEDIA ENQUIRIES Daphne Mokwena MediaDesk@eskom.co.za GROUP CHIEF FINANCIAL OFFICER Calib Cassim OfficeoftheCFO@eskom.co.za QUERIES OR FEEDBACK ON OUR REPORTS IRfeedback@eskom.co.za Our suite of reports covering our integrated results for 2024 is available at https://www.eskom.co.za/investors/integrated-results/ FORWARD-LOOKING STATEMENTS Certain statements in this report regarding Eskom’s business operations may constitute forward-looking statements. These include all statements other than statements of historical fact, including those regarding the financial position, business strategy, management plans and objectives for future operations. Forward-looking statements constitute current expectations based on reasonable assumptions, data or methods that may be imprecise and/or incorrect and that may be incapable of being realised. As such, they are not intended to be a guarantee of future results. Actual results could differ materially from those projected in any forward-looking statements due to various events, risks, uncertainties and other factors. Eskom neither intends nor assumes any obligation to update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise. Future performance plans and/or strategies referred to in the integrated report have not been reviewed or reported on by the group’s independent auditors. 137 Who we are and how we create value Leadership reports Our strategic and risk landscape Governance and ethics Performance review Supplementary information www.eskom.co.za