PERFORMANCE COMMENTARY 2025 FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2025 The following commentary provides an overview FINANCIAL PERFORMANCE Demand from international customers increased Spend on Eskom-owned and IPP OCGTs combined of the Eskom group’s financial and operational FINANCIAL RESULTS FOR THE PERIOD as drought conditions reduced power available increased by 6% to R6.5 billion to produce 1TWh performance for the six months ended The Eskom group recorded an improvement to the region from other sources, and Eskom’s (September 2024: R6.1 billion to produce 0.9TWh). 30 September 2025, as well as progress on other in financial performance compared to the prior stable generation performance assisted in meeting This includes fuel costs, storage and demurrage key matters. It follows the integrated report for year: EBITDA grew by 11% to R68.5 billion the higher demand. Consumption on a non-firm charges, as well as maintenance costs in the case the year ended 31 March 2025, which was released (September 2024: R61.7 billion), profit before tax basis by Eswatini, Lesotho and Zambia increased of IPP OCGTs, but excludes the impact of fuel levy on 30 September 2025. Developments after the increased by 41% to R32.5 billion (September 2024: year-on-year. Firm power supply agreements for rebates for comparability. Under our record-keeping end of the period to 28 November 2025, being the R23 billion), while profit after tax increased by 37% to additional capacity were concluded with Botswana arrangement with the South African Revenue Service date of approval by the Board, have been discussed R24.3 billion (September 2024: R17.8 billion). and Namibia from 1 April 2025, whereas supply (SARS), R1 billion in fuel levy rebates has been where relevant. to Zimbabwe has been terminated due to recorded for the period (September 2024: nil). R billion non-payment. Botswana has recently concluded The financial results have not been audited or 120 a payment arrangement with the National Employee benefit costs increased by 6% to reviewed by the external auditors. Transmission Company South Africa SOC Ltd R21.6 billion (September 2024: R20.4 billion). 100 (NTCSA) following challenges in settling its account. Headcount increased by 3% year-on-year due to the This commentary accompanies the consolidated interim 80 appointment of core and critical skills in Generation group financial statements, which are available at 60 Sales volumes remain suppressed due to the continued and Eskom Rotek Industries. Further contributing www.eskom.co.za/investors/integrated-results/ impact of theft through illegal connections, meter to the year-on-year increase were remuneration 40 tampering and the use of illegal electricity tokens on adjustments of 7% on average granted to bargaining 20 prepaid meters. These losses, which are recognised as unit and managerial level employees, coupled with PERFORMANCE HIGHLIGHTS non-technical losses, continue to have a detrimental higher overtime costs, particularly in Generation. 0 • Profit after tax of R24.3 billion (September 2024: Sep Sep Sep Sep Mar Sep impact on sales volumes and revenue, despite Furthermore, income differential adjustments were R17.8 billion) 2021 2022 2023 2024 2025 2025 improving due to targeted interventions over the past implemented at the end of FY2025, and production • Lost-time injury rate improved significantly to 0.17 Free funds from operations (FFO) EBITDA year. The volume lost is estimated at 7.9TWh (around bonuses were awarded to eligible employees based (September 2024: 0.29), but regrettably, Eskom 8% of sales volumes) for the period (September 2024: on achievement of power station or business unit recorded one employee and two contractor Revenue grew by 4% to R191.3 billion (September 2024: 8.7TWh), which equates to an estimated R17.5 billion operational performance targets during the period. fatalities during the period (September 2024: one R183.7 billion), driven by a 12.74% regulatory standard in lost revenue using the average electricity price tariff increase from 1 April 2025. While not fully (September 2024: R17.7 billion). Repairs and maintenance expenditure increased by employee and one contractor fatality) 8% to R16.1 billion (September 2024: R14.8 billion) addressing the inadequacy of tariffs, the higher tariff for • 62.41% generation plant availability stable Regrettably, the non-payment of municipal and mainly due to Generation conducting extensive the year is assisting to migrate the tariff path to more (September 2024: 62.94%) metro accounts continues to constrain our finances, unplanned maintenance to address several plant appropriate levels, positively impacting our financial • Only four days loadshedding implemented sustainability. The higher tariff will also lessen the burden despite interventions under the municipal debt relief performance challenges, in addition to planned during the period (26 hours in total and 36GWh on the taxpayer by reducing the need for debt relief programme. R9.5 billion (around 5% of revenue) could maintenance under the Generation Recovery Plan. estimated lost due to loadshedding), with no support from Government once Eskom is financially not be recognised as revenue in accordance with loadshedding since 15 May 2025 IFRS® Accounting Standards, due to the high risk of Net finance costs reduced by 14% to R15.3 billion sustainable on a standalone basis. • Achieved commercial operation of Kusile Unit 6 non-collectability from customers (September 2024: for the period (September 2024: R17.8 billion) due (799MW installed capacity) The tariff increase was counteracted by a R7.9 billion). to lower interest rates and lower levels of debt 3% reduction in sales volumes to 92.8TWh securities and borrowings. The average cost of debt • Medupi Unit 4 returned to service after extended (September 2024: 95.7TWh). Local sales declined Primary energy costs declined by 1% to R78.4 billion has decreased to 9.92% (September 2024: 10.92%) repairs (720MW nominal capacity) by 3% to 86TWh (September 2024: 89.2TWh), (September 2024: R79.3 billion), with lower spend following trends in global interest rates. Gross debt • Transmission network reliability stable, with on international purchases due to supply constraints securities and borrowings (excluding the shareholder system minutes lost <1 of 2.32 minutes while international sales increased by 4% to 6.8TWh (September 2024: 6.5TWh). at Hidroelèctrica de Cahora Bassa in Mozambique loan) declined to R362.7 billion (March 2025: (September 2024: 2.39) given regional drought conditions, and marginally R372.7 billion) due to the strengthening of the Rand, • 146.3km of additional transmission lines installed Local sales volumes were most affected by lower spend on independent power producers (IPPs). which had a positive impact on the carrying value of and 1 500MVA transformers commissioned ferrochrome customers in the industrial sector, which These factors were offset by higher coal usage costs foreign-denominated borrowings. (September 2024: 75.8km and 200MVA) experienced unplanned plant breakdowns or halted due to inflationary contractual increases as well • 28 756 new electrification connections production and took smelters offline for maintenance as more extensive use of open-cycle gas turbines (September 2024: 48 417) and 131 790 smart due to poor market conditions. The increase in (OCGTs) year-on-year to support the power system meters installed (September 2024: 48 417) embedded self-generation – mainly through rooftop owing to higher planned maintenance and slightly solar installations across many sectors – continues higher generation plant unavailability. to drive a decline in sales volumes. We estimate that more than 7.3GW of behind-the-meter rooftop solar capacity has been installed in South Africa. 1 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025 Cash and cash equivalents have remained stable at approved for conversion to equity by the Minister OPERATIONAL PERFORMANCE be utilised to support the power system and mitigate R63.9 billion at 30 September 2025 (March 2025: of Finance, based on compliance with the strategic PEOPLE AND SAFETY against the risk of loadshedding, OCGT use was R63.8 billion). Sufficient liquidity is vital to service conditions attached thereto. The related shares have We remain committed to strengthening occupational limited mostly to morning and evening peaks. debt obligations, execute our capital expenditure also been issued. health and safety practices in line with our core programme and set aside funding for long-term value of Zero Harm. The lost-time injury rate Driven by the 2.9TWh reduction in sales volumes decommissioning provisions. Under the amendment to the debt relief package of 0.17 has shown significant improvement discussed earlier, Eskom generation also had early in FY2026, a total of R80 billion in support is (September 2024: 0.29). Sadly, Eskom recorded one to be cut back to 95.7TWh (September 2024: Most of the group’s financial ratios have improved, expected to be received in the fourth quarter of employee and two contractor fatalities during the 97.2TWh). Power imports decreased to 1.8TWh with further improvement in debt service cover FY2026. The amount will be used for FY2026 debt period (September 2024: one employee and one (September 2024: 4.4TWh) due to lower production anticipated by year end. The EBITDA margin has also servicing and to settle the ES26 domestic bond which contractor). Our heartfelt condolences go to the from Cahora Bassa because of the drought in the improved to 35.83% (September 2024: 33.56%) on matures in early April 2026. Thereafter, a final amount affected families, friends and colleagues. The loss of region as well as faults and outages reducing output. the back of higher tariffs, coupled with cost pressures of R10 billion is due in FY2029, to assist with the any life in Eskom’s service is unacceptable and must IPP production declined to 9TWh (September 2024: easing following improved operational performance. redemption of the EL28 domestic bond in May 2028. be prevented. Every fatality is investigated to identify 9.2TWh), primarily due to curtailment of renewable We also expect to draw down R4.2 billion from the root causes and implement corrective actions and energy which comes at a cost given the take-or- DEBT RELIEF AND FUNDING existing DFIs and export credit agencies (ECAs) in pay nature of IPP contracts. The curtailment is Debt servicing outflows of interest and capital prevent a recurrence. FY2026, based on the execution of projects linked necessitated when renewable energy is oversupplied amounted to R22.8 billion for the period to these facilities. Group headcount increased to 42 547 employees during instances of lower demand, either at night, (September 2024: R27.3 billion). Drawdowns from at the end of the period (September 2024: 41 459). when wind energy is at its highest or during the development finance institutions (DFIs) amounted The debt servicing profile, based on existing debt The increase is primarily due to the appointment daytime, when behind-the-meter solar PV generation to R0.3 billion during the period (September 2024: at 30 September 2025 and excluding incremental of core and critical skills in Generation and Eskom reduces demand and solar IPP generation has to be R5.5 billion). borrowings, remains high over both the short and Rotek Industries. curtailed. Encouragingly, overall energy losses reduced long term. Debt repayments and interest payments of to 13.2TWh (September 2024: 14.4TWh) due to our Given our improved financial performance and around R191.2 billion and R103.4 billion respectively Racial equity at senior management level improved interventions aimed at reducing non-technical energy liquidity position, no debt relief support was required are due until the end of FY2030. The balance of significantly to 82.57% (September 2024: 80%), losses (electricity theft). to meet these obligations during the period under the debt relief from Government will assist us in while racial equity at professional and management review (September 2024: R8 billion). Although meeting these obligations. Following that, we still have level also increased to 87.60% (September 2024: Generation plant availability (EAF) for the period initially treated as an interest-bearing subordinated sizeable redemption obligations which will have to be 86.09%). Gender equity at senior management level was 62.41% (September 2024: 62.94%) and did not shareholder loan, all debt relief amounts received to serviced using cash from operations and incremental increased marginally to 42.36% (September 2024: meet the half-year shareholder compact target of the end of FY2025 (including the R56 billion shown borrowings. 42.29%) and improved to 43.83% at professional 65%. The slight year-on-year decrease in EAF is due as a shareholder loan at 31 March 2025) have been and middle management level (September 2024: to an increase in both planned maintenance (PCLF) 42.57%). Nevertheless, gender representation at to 11.29% (September 2024: 10.93%) as part of the Ratio Ratio technical and leadership levels remains a concern. Generation Recovery Plan, and unplanned losses 3.5 25 Disability equity at group level has improved to 3.21% (UCLF) to 25.80% (September 2024: 25.62%). Other 3.0 (September 2024: 2.96%), exceeding the national losses outside of management control remained low 20 target of 2%. Targeted interventions are being at 0.50% (September 2024: 0.51%). Coal-fired stations 2.5 executed to accelerate transformation across all recorded an average energy utilisation factor (EUF) of 2.0 15 occupational levels and promote inclusive workplace 85.96% for the period (September 2024: 89.71%), with 1.5 practices that support both retention and cohesion. EUF over 85% at all 14 coal-fired stations. 10 1.0 % SYSTEM AND GENERATION PERFORMANCE 0.5 5 80 Stage 2 loadshedding was required over evening peak 0.0 Sep Sep Sep Sep Mar Sep 0 on four days in April and May 2025 (September 2024: Sep Sep Sep Sep Mar Sep 60 2021 2022 2023 2024 2025 2025 none) for 26 hours in total, with an estimated 36GWh 2021 2022 2023 2024 2025 2025 Debt/equity ratio Cash interest cover lost due to loadshedding. Since then, we have FFO as % of gross debt Gross debt/EBITDA 40 Debt service cover achieved 187 consecutive days without loadshedding by 28 November 2025. During the period, average unplanned unavailability of around 12 200MW was 20 lower than the base-case assumption of 13 000MW for the Winter Outlook (September 2024: around 0 Sep Sep Sep Sep Mar Sep 12 100MW). Although Eskom and IPP OCGTs had to 2021 2022 2023 2024 2025 2025 EAF PCLF UCLF 2 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025 The return of Medupi Unit 4 to service a month later At 30 September 2025, only one station had coal NETWORK PERFORMANCE Despite the stabilisation of the power system, local than expected contributed to the higher UCLF during stock below its individual minimum stockholding Transmission system minutes performance at load reduction measures remain necessary in certain the period. Extended inoperability at Matla Unit 6 level (September 2024: one station). Furthermore, 2.32 minutes lost remained stable (September 2024: of Eskom’s areas of supply during periods of peak and Arnot Unit 2 further contributed to the higher all power stations remained above the stock levels 2.39), despite two major incidents being recorded demand to ensure public safety and to safeguard our UCLF. Other factors contributing to the higher UCLF required by NERSA’s Grid code. This is attributable during the period (September 2024: two). distribution network against equipment failure due include higher average partial load losses during the to successful implementation of targeted recovery to overloading caused by illegal connections. We are period, together with deteriorating performance on plans. Normalised coal stock of 47 days (excluding Transmission lines installed of 146.3km taking active steps to eliminate load reduction by outage slips and post-philosophy outage performance. coal stock at Medupi) also improved as a result (September 2024: 75.8km) and transformer March 2027 through the deployment of smart meters Unit trips and boiler tube failures decreased slightly (September 2024: 42 days). Load losses outside capacity installed and commissioned of 1 500MVA enabling advanced online monitoring and management year-on-year. of management control related to coal quality (September 2024: 200MVA) both increased of demand at customer level. This will be coupled contributed 0.41% OCLF during the period year-on-year to meet the ambitious goals under with the rollout of distributed energy resources Contribution to UCLF, % (September 2024: 0.34%), with most losses still the Transmission Development Plan (TDP). The such as microgrids to bolster supply in remote and recorded at Matla. focus remains on accelerating project development high-demand areas. These initiatives will benefit and execution, to deliver 1 987km of high-voltage approximately 1.69 million customers in Gauteng, 6.17 Koeberg Unit 1 was taken offline for a planned transmission lines and 13 910MVA transmission Limpopo, Mpumalanga and KwaZulu-Natal. refuelling outage on 17 February 2025, which was transformer capacity to connect capacity of around 10 days later than the initial plan to accommodate 17 000MW by the end of FY2032. ENVIRONMENTAL PERFORMANCE high electricity demand. The unit’s return to service Relative particulate emission performance of 12.96 25.80% date was delayed due to rework and unanticipated Events/hours Minutes 1.81kg/MWh sent out has deteriorated significantly 2.31 defects. The unit was synchronised to the grid on 40 5.0 since the previous year (September 2024: 0.55kg/MWh 29 October 2025 after refuelling and replacement of sent out), driven by underperformance at Kendal, 4.0 the steam generators, thereby boosting Eskom’s base- 30 Matimba, Lethabo and Kriel. The main causes were 2.68 load capacity and improving EAF performance. 3.0 poor electrostatic precipitator performance, SO3 plant 1.68 20 failures as well as challenges with dust handling and Koeberg Unit 2 continues to operate at full load since 2.0 Full load losses Outage slips being synchronised to the grid on 11 March 2025 ash plant. 10 1.0 Boiler tube leaks Unit trips following a reactor trip. On 6 November 2025, To improve emission performance, stations will Partial load losses the National Nuclear Regulator (NNR) approved 0 0.0 continue to drive implementation of the remaining Sep Sep Sep Sep Mar Sep a 20-year licence extension for Unit 2, allowing it 2021 2022 2023 2024 2025 2025 Minimum Emission Standard (MES) retrofit projects. to continue operating until 2045 and strengthening Additionally, stations have identified key actions Kusile Unit 6 was successfully synchronised to the grid SAIFI (events) SAIDI (hours) South Africa’s future energy security. This milestone to improve emission performance, particularly the in March 2025, and achieved commercial operation System minutes lost for events <1 minute follows Koeberg’s rigorous long-term operation optimisation of completed emission upgrades, the on 29 September 2025, adding 799MW of installed programme, which included safety assessments, recovery of the dust handling plant, and management base-load capacity to the grid (and 720MW nominal Distribution network performance deteriorated engineering upgrades and system modernisation to of the complete ashing cycle, with key aspects being capacity). The Kusile project remains on schedule for slightly year-on-year, with system average interruption ensure that Koeberg continues to meet the highest tracked under the Generation Recovery Plan. completion early in FY2028. frequency (SAIFI) deteriorating to 11.9 events during international nuclear standards while meeting regional the period (September 2024: 11 events) and system Medupi Unit 4 was out of service since August 2021 energy needs. The next outage on Unit 2 is expected kg/MWh sent out ℓ/kWh sent out average interruption duration worsening to 35.4 hours due to a generator explosion. The unit was returned to commence by March 2026. 2.0 1.50 (September 2024: 34.3 hours). Distribution energy to operation on 6 July 2025 using a second-hand losses at 10.08% – due to illegal connections, meter As part of the NNR’s licence requirements, we have 1.6 stator, reinstating 720MW of nominal base-load tampering as well as illegal vending – has shown 1.45 set aside funds to ensure that sufficient financial capacity to the grid. This successful return strengthens marked improvement due to targeted interventions 1.2 resources will be available to fund Koeberg’s Eskom’s base-load capacity and supports national (September 2024: 10.42%), although losses continue 1.40 decommissioning costs once it reaches the end of 0.8 energy security, in line with our operational stability to have a significant financial and operational impact. its useful life. To date, we have set aside R2.8 billion objectives. 0.4 1.35 (including interest) in this regard (September 2024: R2.5 billion). 0.0 1.30 Sep Sep Sep Sep Mar Sep 2021 2022 2023 2024 2025 2025 Relative particulate emissions Water consumption 3 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025 Water performance has improved slightly to OTHER KEY DEVELOPMENTS 1.40ℓ/kWh sent out (September 2024: 1.44ℓ/kWh BOARD AND EXECUTIVE CHANGES sent out). Nine water-related legal contravention The Minister of Electricity and Energy, Eskom’s incidents have been registered during the repor ting shareholder representative, extended the three- period due to non-compliance with the National year term of the independent non-executive Water Act, 1998 (September 2024: 11). directors of the Eskom Board by two months to 30 November 2025 to allow sufficient time for the Focused monitoring of the effective implementation appointment of the incoming Board. of water management action plans, both at power station level and by the Generation Environmental On 16 October 2025, Cabinet gave approval for Compliance Steering Committee, have resulted in the Minister to appoint seven candidates to the a slight improvement in water performance. Power Eskom Board, with four current Board members stations remain focused on fixing leaks during being approved for reappointment. Mr Mteto Nyati opportunity maintenance and outages, as well as will remain in his role as Chairman of the Board, by dredging dams, preventing excessive ash and oil with his three-year term concluding at the end of entering the dams, and ensuring availability of pumps October 2026. Furthermore, Mr Dan Marokane to recover water from the dams for reuse. (Group Chief Executive) and Mr Calib Cassim (Group Chief Financial Officer) will remain as SOCIETAL IMPACT executive directors. Procurement spend with B-BBEE compliant suppliers remains high at 90.67% (September 2024: 92.06%), The following candidates will join the Eskom Board: with procurement equity improving across all • Dr Andrew Barendse designated groups compared to the prior year. • Dr Kgaugelo Chiloane Despite this, spend with certain categories of • Ms Sharmila Govind suppliers remains below targeted levels. We await publication of the National Treasury’s accompanying • Dr Dimakatso Matshoga regulations for the Public Procurement Act, • Mr Tshokolo Nchocho 2024, which will act as enabler to effectively drive • Dr Vuyo Peach transformation objectives. • Ms Bajabulile Tshabalala We completed 28 756 connections using grant The following Board members have been reappointed funding under Government’s electrification to ensure continuity: After 23 years’ service, Mr Calib Cassim has indicated TRANSFORMING ESKOM AND THE programme (September 2024: 48 417). We also that he will be retiring from his role as CFO and he ELECTRICITY SUPPLY INDUSTRY • Mr Lwazi Goqwana committed corporate social investment spend of intends exiting the organisation in October 2026 UNBUNDLING ESKOM • Mr Clive le Roux R62.96 million during the period, assisting 32 249 when he reaches the age of 55. The period before his Eskom’s Evolution Unbundling Programme is • Dr Tsakani Mthombeni scheduled departure will afford Eskom an opportunity beneficiaries (September 2024: R55.70 million to facilitating the legal separation of Eskom into three • Dr Busisiwe Vilakazi to appoint a replacement and ensure a smooth distinct entities, aligned to Government’s Roadmap 327 888 beneficiaries). transition. He will step down as executive director for Eskom in a Reformed Electricity Supply Industry The following Board members will step down when once a new CFO has been appointed. (Roadmap) issued in October 2019. To date, the their term concludes on 30 November 2025: functional separation of all three business units has • Ms Fathima Gany Mr Segomoco Scheppers, former Group Executive: been successfully completed. With NTCSA having • Ms Ayanda Mafuleka Transmission, served as the interim CEO of NTCSA achieved legal separation and commenced trading • Mr Leslie Mkhabela since the subsidiary commenced trading from in July 2024, the next step is to legally separate the • Mr Bheki Ntshalintshali 1 July 2024. His secondment to NTCSA concluded distribution and generation businesses. on 31 July 2025 and he will retire in December 2025. • Ms Tryphosa Ramano The progression of the programme has revealed • Dr Claudelle von Eck Mr Monde Bala, Group Executive: Distribution, was several insights impacting its status and future seconded to the role of interim CEO of NTCSA from direction. These include learnings from NTCSA’s Ms Bajabulile Tshabalala will take over as lead 1 August 2025. He was subsequently appointed as legal separation, the promulgation of the Electricity independent director from Mr Leslie Mkhabela. CEO of NTCSA effective 1 October 2025. Following Regulation Amendment Act (ERAA) and clarity this change, Ms Agnes Mlambo was appointed from the shareholder on the preferred legislative as acting Group Executive: Distribution from route for the establishment of a new holdings 1 August 2025. 4 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025 company (NewCo). Other factors influencing the way As reported previously, Eskom and African Bank forward include publication of the draft market code, concluded all agreements relating to the sale of the ongoing engagements on the electricity distribution loan book of Eskom Finance Company (EFC) and its industry reforms and the further escalation in interests in Nqaba Finance, with a commencement municipal arrear debt. date of 31 March 2025, with the associated assets and liabilities classified as held-for-sale in the group’s In response, Eskom undertook a review of its financial statements. The required PFMA approvals unbundling strategy, with Board approval in July 2025. have been secured, and the Competition Tribunal The Minister of Electricity and Energy provided approved the transaction on 30 September 2025. in-principle approvement of the refined strategy in The final effective date of the transaction depends on September 2025, subject to the shareholder’s formal Prudential Authority approval, which is awaited. governance process. INVESTMENTS IN SUPPORT OF INDUSTRY The Board-approved final structure for an REFORM unbundled Eskom will comprise a new holding Eskom welcomes the finalisation of the Integrated company (by October 2029) with four subsidiaries Resource Plan (IRP) 2025, which establishes a (in addition to existing subsidiaries): GenerationCo, balanced framework for energy security, affordability, NTCSA, the National Electricity Distribution environmental responsibility and economic inclusion. Company of South Africa (NEDCSA) and The IRP 2025 sets out a clear investment pathway and Eskom Green. highlights the need for regulatory certainty to attract Provided that Distribution can attain financial private capital. Eskom is committed to supporting the sustainability by January 2030, NEDCSA will be able plan through continued operational improvements, to separate by 1 April 2030. investment in transmission infrastructure and maintaining reliable base-load generation. Eskom will Additionally, a new and independent transmission undertake a detailed review of the IRP 2025 and will end of FY2026. Beyond that, evaluation of tenders The draft market code incorporates comments system operator (TSO) will be established outside the publish a formal response and updated strategic plan is expected late in FY2027, with construction start received from stakeholders and feedback from a Eskom group to carry out the functions of the TSO as in due course. anticipated in FY2028. legal due diligence. With the Market Operator now set out in the ERAA. These are: licensed, NTCSA will finalise the market code to NTCSA has identified two priority programmes to • Transmitter: Develop and execute the Transmission EVOLUTION OF A COMPETITIVE ELECTRICITY establish a clear and stable rules framework for the accelerate the delivery of transmission infrastructure Development Plan, maintain and operate the MARKET operation of the future electricity market. The market to facilitate grid-connection of new generation transmission grid, and provide non-discriminatory A key requirement of the Electricity Regulation code will be submitted to NERSA for consideration capacity, primarily from renewables. These access to that grid to all market participants Amendment Act, 2024 is the implementation and approval after NERSA publishes the licence programmes entail the development of 19 projects for • System Operator: Operate the integrated power additional transformers in existing substations, which of a competitive wholesale electricity market. conditions and reason for decision. system and balance supply and demand in real time will unlock 12 485MW of new generation in the next The Market Operator has been established within • Market Operator: Establish and manage a NTCSA. A market operator licence application was The South African Wholesale Electricity Market five years, and 22 expedited projects that will unlock transparent, non-discriminatory electricity trading approved by NTCSA’s governance structures and (SAWEM) School has been operating since July 2025. 22 386MW of grid connection capacity by FY2034. platform in compliance with market codes and rules submitted to NERSA in July 2025 with additional Six training events have been successfully concluded, issued by NERSA, to ensure competitive trading Furthermore, the Department of Electricity and information NERSA had requested. Following with a further eight events planned before the end between generators, traders and customers Energy (DEE) and National Treasury are leading public hearings in September 2025, NERSA of FY2026. These events are crucial to prepare Phase 1 of the Independent Transmission Project awarded the market operator licence to NTCSA role-players and market participants for the launch • Central Purchasing Agency: Act as buyer of electricity (ITP) Programme to explore alternate funding models on 27 November 2025, marking an important step of the whole electricity market, originally expected from generators, including Eskom (through that can be considered to encourage private sector toward establishing a fair, competitive electricity to commence on 1 April 2026. Given the many risks GenerationCo and Eskom Green) and IPPs, and participation in the acceleration of transmission market in South Africa. and dependencies – including NERSA’s award of the facilitate power purchase agreements infrastructure investments. To date, the request market operator licence and approval of the market • Other duties: Support ancillary services such A draft market code was developed and published code, together with finalisation of a wholesale tariff as frequency control and voltage regulation to for qualification was released to the market on 30 July 2025, with 17 bids received. DEE’s IPP Office for stakeholder comment. The Market Operator – it is expected that the wholesale market could be maintain system reliability conducted 10 workshops during 2024 to engage with fully operational by October 2026. In the interim, is busy with the evaluation to determine the number of qualified bidders, with selected bidders expected industry stakeholders on the market code (including an internal market is expected to be up and running Our Integrated Unbundling Plan, which reflects these to be announced by no later than 15 December 2025. government departments, Eskom, municipalities, by April 2026. It will involve Eskom Generation, developments and considers relevant stakeholder Preparation of the request for proposal is underway consumers, IPPs and traders), with further Distribution and NTCSA, with trading results fully inputs, will guide our activities and interactions with to enable release to the pre-qualified bidders by the consultation during August and September 2025. visible and transparent on the market platform. stakeholders, including lenders, organised labour and market participants. 5 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025 The lack of a transparent, rules-based market We have proposed alternate solutions for National providing a fair platform for competition poses a Treasury to implement for defaulting municipalities. risk of Eskom losing a disproportionate share of These include: paying customers to private generators and creates • Concluding distribution agency agreements uncertainty for investors. This would increase the (DAAs) where Eskom will act as agent to enhance burden on the remaining customers, including those electricity reticulation and distribution of electricity most vulnerable, and would exert further pressure in municipal areas of supply and revenue collection on Eskom’s sales, thereby jeopardising financial by municipalities sustainability. To mitigate this risk, it is essential to • Obtaining an exemption to the Municipal Finance intensify discussions on electricity market reforms and Management Act, 2003 (MFMA) which will allow the future of the broader distribution industry. Eskom municipal customers to pay Eskom directly is proactively involved in shaping these market rules • Establishing prepaid or credit-limited electricity through the process led by NERSA. supply agreements between Eskom and defaulting ADDRESSING ARREAR MUNICIPAL DEBT municipalities Non-payment of municipal debt continues to • Implementing interventions either to withhold pose a systemic risk to the electricity industry and equitable share payments to defaulting Eskom’s financial sustainability. This stems from poor municipalities until they meet their obligations or municipal financial management practices, including to pay a portion of the equitable share directly unsatisfactory revenue collection and inadequate to Eskom credit control. Excessive electricity and water The Minister of Finance announced in the Medium- losses due to a lack of maintenance exacerbate the Term Budget Policy Statement (MTBPS) on challenges faced by municipalities. 12 November 2025 that defaulting municipalities Despite 71 municipalities participating in the municipal will transition to DAAs as an interim measure, to debt relief programme, municipal arrear debt has stabilise municipal cash flows and improve municipal We are also engaging at various intergovernmental non-compliance with a previous court order on the increased to R105 billion by 30 September 2025 service delivery and financial discipline. Cabinet has platforms to address the sustainability challenges valuation of the regulatory asset base. In August 2025, (September 2024: R90.1 billion). Over 85% of those supported the implementation of DAAs for defaulting affecting municipalities and drive reform across the NERSA agreed to a R54 billion settlement relating municipalities are not meeting the requirement to municipalities. Under these agreements, Eskom will distribution industry. to our court review application, to be endorsed by settle their current accounts on time, with compliant operate municipal electricity services temporarily a court order, initially scheduled for hearing on the municipalities accounting for only around 1% of the and for a defined period, assist with collections from ADDRESSING THE ELECTRICITY TARIFF PATH unopposed roll of the High Court. The settlement R58.5 billion arrear debt balance at 31 March 2023 customers, and support initiatives to reduce energy The establishment of a predictable and reliable would grant Eskom additional allowable revenue of ring-fenced for possible write-off. losses and set appropriate tariffs. Measures will also long-term tariff path and suitable tariff structures that R12 billion for FY2027 and R23 billion for FY2028, be implemented to assist municipalities to raise balance customer affordability with Eskom’s financial In August 2025, National Treasury confirmed resulting in estimated standard tariff increases revenue, including the rollout of smart meters. sustainability is another key priority to ensure the amendments to the debt relief conditions allowing of 8.76% for FY2027 and 8.83% for FY2028. The National Treasury has indicated that this interim sustainability of the electricity industry. The Electricity recovery of the remaining R19 billion would still municipalities to qualify for write-offs if they catch Pricing Policy requires NERSA to publish a minimum up on overdue payments after a 12-month cycle. measure does not rule out stronger interventions be determined by NERSA but was only expected where failures persist. Concurrently, National 10-year price forecast to support market certainty from FY2029. Consequently, five municipalities that were facing and facilitate long-term planning. The absence of a termination from the programme now qualify for the Treasury will undertake longer-term structural tariff outlook beyond the three years of NERSA’s However, the not-for-profit civil rights organisation first one-third debt write-off based on the amended reforms in the local government fiscal framework. latest multi-year price determination decision AfriForum filed an affidavit contesting aspects of the conditions. To date, National Treasury has instructed (MYPD 6) presents a significant risk to both Eskom proposed settlement and was since joined by the If not addressed as a matter of urgency, escalating Eskom to write-off one-third of the ring-fenced debt and its customers, hindering financial planning over Minerals Council South Africa; the matter could not municipal arrear debt jeopardises Eskom’s legal for 24 municipalities (totalling R4.2 billion) based on the longer term. With the support of the Minister of proceed on the unopposed roll. Should the court not separation and could require an extension of the their compliance with the debt relief conditions for Electricity and Energy, we will engage with NERSA deliver a judgment in time to enable tabling of municipal timelines for the legal separation of NEDCSA. the first 12-month cycle. and other stakeholders on establishing a predictable tariffs by 15 March 2026 as required by the MFMA, the At worst, it may result in continued reliance on financial We believe that more stringent measures are support from Government beyond the debt relief long-term tariff outlook. implementation of the additional revenue may need to be required to address the persistent municipal arrear period. We are encouraged by Government’s response deferred to FY2028, which could have a knock-on effect to our proposals, including the implementation of In June 2025, Eskom submitted a review application on containing future tariff increases to single digits. debt challenge, which continues to undermine to the High Court to challenge NERSA’s MYPD 6 Government’s efforts to fully resolve the national National Treasury’s municipal reform programmes to stabilise municipal and metro service delivery, decision, based on data input errors made by NERSA, energy crisis and reform the electricity industry. incorrect application of the MYPD methodology and improve asset care and ring-fence related revenue. 6 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025 MINIMUM EMISSION STANDARDS achieved without the continued focus on improving commencement of the FY2025 audit. Ongoing focus the Minister of Electricity and Energy, NECOM and EXEMPTIONS plant performance to enable reliable electricity supply on stability, reform and robust governance remains Government, for the collaborative effort in addressing On 31 March 2025, the Minister of Forestry, Fisheries to customers while limiting OCGT use. essential to secure recent gains, address residual the country’s electricity challenges. With the support and the Environment (DFFE) granted Minimum challenges and advance Eskom’s resilience and of the incoming Board, we will continue to focus on Emission Standards (MES) exemptions for eight Eskom remains committed to consistently reducing sustainability agenda. We continue to strive toward recovering generation performance to levels expected stations operating beyond 2030, namely Matla, Duvha, the need for loadshedding by improving our own an unqualified audit opinion and publishing our by our shareholder and the country; rolling out Tutuka, Kendal, Lethabo, Majuba, Matimba and Medupi. generation reliability through the recently launched annual results within legislated timeframes to rebuild new distribution products; aggressively driving our Eskom’s engagement with DFFE to challenge aspects Generation Operational Reliability and Sustainability stakeholder confidence in governance and financial renewable energy business; strengthening governance, of the decision was unsuccessful. Consequently, Plan which builds on existing plans to integrate reporting systems. internal controls and consequence management; all Eskom submitted a High Court review application people, plant and process interventions, supported while combatting crime, fraud and corruption. In in September 2025 to review and set aside specific by international utility partnerships and enhanced On 14 November 2025, South Africa received addition, we need to future proof the organisation conditions of the decision, particularly the five-year governance structures. To this end, the unplanned its first credit rating upgrade in two decades, to enable energy security, growth and long-term exemption limit for six stations which hinders future unavailability provision for the scenarios under with S&P acknowledging South Africa’s improving sustainability for the benefit of South Africa and planning by Eskom and our customers. The Centre the Summer Outlook (covering the period from growth and fiscal trajectory, alongside the impact sub-Saharan Africa. for Environmental Rights has also initiated a separate 1 September 2025 to 31 March 2026) shows no of Eskom’s improved performance and anticipated review on the basis that the Minister’s decision was loadshedding up to levels of unplanned unavailability reduction in reliance on Government support. unconstitutional, with Eskom being a respondent in the of 15 000MW, supporting our aspiration of achieving On 24 November 2025, S&P also upgraded Eskom’s matter. Hearings on both applications are expected 66% EAF by the end of FY2026. foreign and local currency long-term credit ratings only in the 2026 calendar year. from B to B+ with a stable outlook. Even though FORWARD-LOOKING The progress Eskom is making with its turnaround our creditworthiness will continue to benefit from STATEMENTS In relation to the power stations that are to be plan gives potential investors more reasons to Government’s support over the remainder of the invest in South Africa and, in turn, create jobs and Certain statements in this commentary decommissioned by 2030 – Hendrina, Grootvlei, debt relief period, we aim to reach investment regarding Eskom’s business operations may Arnot, Camden and Kriel – our request for prosperity. The concrete and ongoing delivery of the grade status on a standalone basis (without further turnaround plan has boosted business confidence, constitute forward-looking statements. suspension of the MES limits was granted. The Government support or guarantees) in the longer These include all statements other than decision allows these stations to continue operating at with credit rating agencies and banks stating that term to strengthen Eskom’s investment case. Eskom’s performance recovery is a key contributor statements of historical fact, including emission levels achievable using the already installed those regarding the financial position, emission reduction technologies. towards positive sentiments regarding South Africa’s Stabilising our financial position and holding the prospects of achieving an average of 1.8% GDP necessary cash balances is essential for providing business strategy, management plans and growth over the medium term. As noted in the the financial headroom for strategic planning and objectives for future operations. While the court process unfolds, we are committed to complying with all exemption conditions, making MTBPS, South Africa’s growth prospects depend on a execution. This will facilitate investment in generation Forward-looking statements constitute progress on both general and station-specific sustained operational recovery at Eskom and ongoing plant and network maintenance, emission reduction current expectations based on reasonable requirements, despite tight timelines and delays in reforms to restructure the sector and overcome projects, and network expansion to improve grid assumptions, data or methods that may be some areas. distribution constraints. reliability and increase grid connection capacity. imprecise and/or incorrect and that may These investments are critical to support sustainable be incapable of being realised. As such, SUSTAINING THE MOMENTUM Based on the latest estimate, the profit after tax operational performance, enable the energy transition for FY2026 is expected to be at a level similar to they are not intended to be a guarantee Eskom’s financial performance in the first half of the and ensure security of supply as we continue to build of future results. Actual results could year tends to be better than the second half, with the the prior year (March 2025: R16 billion), together Eskom’s future investment case as a resilient and with a projected improvement in Eskom’s cash differ materially from those projected in winter period typically characterised by higher tariffs forward-looking utility with a skilled and experienced any forward-looking statements due to and sales volumes than the summer period. In addition, position. This demonstrates that our results for workforce that meets the evolving needs of our FY2025 were not a once-off achievement and that various events, risks, uncertainties and to ensure adequate supply to sustain the increased stakeholders. other factors. Eskom neither intends nor demand in winter, less maintenance is performed in our progress in turning around operational and financial performance, supported by Government and The delivery against our strategy demonstrates that assumes any obligation to update or revise winter than in summer. Given this seasonality, we face any forward-looking statements contained financial pressure in the second half of the financial year. stakeholder collaboration, is positioning Eskom for Eskom is sustainable and investable. We are well- a sustainable future. positioned to attract capital to support South Africa’s in this commentary, whether as a result Eskom’s long-term profitability and sufficient liquidity infrastructure development, thereby playing a leading of new information, future events or levels remain dependent on an adequate long-term Significant progress has been made in addressing role in shaping the competitive and resilient electricity otherwise. tariff path that balances Eskom’s financial sustainability external audit findings, with around 91% of findings supply industry of the future. with customer affordability; curbing the growth in raised since FY2021 being reported by management municipal arrear debt; containing controllable cost as closed. Around three-quarters of the remaining We remain grateful for the efforts of all our increases to appropriate levels; reducing finance costs open findings relate to FY2024, owing to the late stakeholders to advance progress on our strategic by deleveraging the balance sheet; and addressing the finalisation of the FY2024 audit which allowed initiatives to recover performance and prepare Eskom impact of crime, fraud and corruption. This cannot be insufficient time to address the issues raised before for the future, including the outgoing Eskom Board, 7 ESKOM HOLDINGS SOC LTD Performance commentary | 30 September 2025