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 PERFORMANCE COMMENTARY FOR THE YEAR ENDED 31 MARCH 2024 ESKOM HOLDINGS SOC LTD Integrated report 2024 R billion Plant availability declined to 329 days Emissions performance worsened to Transmission 70 54.56% loadshedding (2023: 280 network 60 (2023: 56.03%), with days), despite diesel usage of 0.79kg/MWhSO reliability 50 15 500MW unavailability and 13.2TWh lost to loadshedding R33.9 billion (2023: 0.70kg/MWhSO) improved significantly 40 30 20 Distribution Distribution energy losses escalated, with 2 employee and Lost-time injury rate 10 network 3 contractor fatalities deteriorated to 0.29 0 performance improved 13.9TWh (2023: 2 employees and (2023: 0.26) 2020 2021 2022 Free funds from operations, R billion 2023 2024 EBITDA, R billion lost due to electricity theft 3 contractors) Net loss before tax improved Tariff increase of Arrear municipal debt escalated to R76 billion Ratio to R25.5 billion 18.65%, in Government debt relief, 20 (2023: R34.6 billion) tempered by a 3% decline R74.4 billion subsequently converted to in sales volumes (2023: R58.5 billion) equity 15 10 The following commentary provides an overview of our financial and FINANCIAL PERFORMANCE 5 operational performance for the year ended 31 March 2024, as well as FINANCIAL RESULTS progress on other key matters. Developments after the end of the year Eskom suffered an after-tax loss of R55 billion in the 2024 financial year 0 to 18 December 2024, being the date of approval of the results by the (2023: R26.1 billion loss after tax). This resulted primarily from a once- 2020 2021 2022 2023 2024 Board, have been discussed where relevant. off adjustment to derecognise a deferred tax asset of R36.6 billion in FFO as % of gross debt Gross debt/EBITDA terms of IFRS Accounting Standards. This was prompted by the transfer During the year under review, generation plant availability has continued of the Transmission Division to the National Transmission Company to decline, resulting in more frequent loadshedding at higher stages on South Africa SOC Ltd (NTCSA) on 31 March 2024, as part of a common average than in the previous year, requiring stage 6 loadshedding on control transaction within the group. Despite the Eskom company 55 days (2023: 34 days). Furthermore, we have continued to experience expecting to return to a tax paying position within the next five years, it Ratio the adverse effects of generation supply constraints on financial was concluded that it is unlikely that the remaining business will generate 3.0 performance, mostly due to the reliance on expensive production from sufficient taxable income within the next five years to fully utilise the Eskom-owned and independent power producer (IPP) open-cycle unused assessed tax losses. However, the derecognition has no impact on 2.5 gas turbines (OCGTs). This situation will continue until Eskom’s plant Eskom’s right to utilise assessed tax losses against future taxable income. availability improves to expected levels and South Africa’s generation 2.0 capacity shortages are alleviated. However, the debt relief support 1.5 provided by Government together with the 18.65% tariff increase for the  efer to note 14 in the consolidated financial statements AFS R 2024 financial year have led to an improvement in liquidity, and allowed 1.0 Eskom to ensure that maintenance and refurbishment programmes are Excluding this adjustment, the loss before tax reduced by 26% to 0.5 funded with appropriate lead times. R25.5 billion (2023: R34.6 billion loss before tax). Eskom also recorded a 26% increase in EBITDA to R43.4 billion (2023: R34.6 billion), with the 0.0 2020 2021 2022 2023 2024 This commentary accompanies the integrated report, consolidated EBITDA margin improving slightly to 14.67% (2023: 13.32%). group financial statements and sustainability report which are available Debt/equity ratio Cash interest cover Debt service cover at www.eskom.co.za/investors/integrated-results/ 1 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 Profitability remained hampered by poor long-term financial sustainability SARS has previously disallowed Eskom’s claims of refunds for fuel levies Relief Act place strict restrictions on Eskom’s capital expenditure on arising from the lack of cost-reflective tariffs, poor operational and road accident fund levies on diesel used to generate electricity at new generation capacity. It further specifies that no new borrowings will performance and the continued impact of electricity theft, above- the Ankerlig and Gourikwa power stations. The dispute was resolved in be allowed from 1 April 2023 until the end of the three-year debt relief inflationary cost increases in some areas, non-payment by municipalities October 2024, with an amount of R9.2 billion being payable by SARS to period until March 2026, unless approved by the Minister of Finance. and metros, as well as high finance costs associated with our significant Eskom. The amount will be recognised as a reduction of primary energy Eskom may, however, continue to draw down on existing facilities. debt burden. We also acknowledge that we have a responsibility to costs during the 2025 financial year as it was assessed as a non-adjusting curtail costs, eliminate inefficiencies and deal with the effects of crime, event at year end. Drawdowns from development finance institutions (DFIs) amounted fraud and corruption. to R7.5 billion during the year (2023: R6.5 billion). We also concluded Employee benefit costs increased by 9% to R35.1 billion for the year private placement funding of R16 billion with the support of the Minister Revenue grew by 14% to R295.8 billion (2023: R259.5 billion) due to (2023: R32.3 billion). The increase is partially driven by a 3% growth in of Finance on 31 March 2023, which is reflected as funding raised the regulatory standard tariff increase of 18.65% implemented from headcount, which remains within budgeted levels, together with a 7% during the year under review, as the funds were only received in early 1 April 2023. While not yet fully addressing the lack of cost-reflective tariffs, remuneration adjustment for all employees up to senior management April 2023. The funding supported liquidity during the first quarter of the the higher tariff for the year is assisting in migrating the tariff path to more level. Overtime costs remain an area of focus, increasing by 20% to financial year, while awaiting receipt of the first tranche of the debt relief. appropriate levels, with a positive impact on financial performance. R3 billion due to high levels of unplanned maintenance (2023: R2.5 billion), mainly in Generation. We managed to contain employee benefit costs Debt securities and borrowings decreased to R412.2 billion However, sales volumes declined by 3% to 183.3TWh (2023: 188.4TWh). below expectations, by developing and sourcing critical skills internally. (2023: R423.9 billion) on the back of Government’s debt relief and Loadshedding and load curtailment led to lower sales volumes because Overall, the replacement rate for critical skills was higher than the attrition the restriction on Eskom’s borrowing activities. The balance would of unserved energy demand, with an estimated 13.2TWh or 7% of sales experienced, with ongoing recruitment initiatives to fill critical vacancies have reduced further if not for the weakening of the Rand, which lost (2023: 13.5TWh). However, the full impact of unserved energy across the business. Decisions around remuneration and benefits consider had a negative impact on the carrying value of foreign-denominated did not manifest in the sales volume reduction due to factors such as our financial challenges and sustainability, in compliance with the conditions borrowings. A further R32 billion in debt relief support was recognised load shifting by customers to adapt to the realities of loadshedding. attached to the Eskom Debt Relief Act, 2023 as amended. as a subordinated shareholder loan at year end and converted to equity Electricity theft through illegal connections, meter tampering and the in July 2024. use of illegal electricity tokens on prepaid meters further reduced sales Other operating expenditure increased by 14% to R41.4 billion volumes, with an estimated 13.9TWh lost (8% of sales) during the year (2023: R36.4 billion). Of this, repairs and maintenance expenditure Although the availability period of the R350 billion Guarantee Framework (2023: 13.4TWh). increased by 30% to R28.7 billion (2023: R22.1 billion), as Generation Agreement expired on 31 March 2023, the expiry of the availability conducted planned maintenance in line with the Generation Recovery period does not impact the existing guarantees in issue, which will remain Other risks to Eskom’s sales volumes include lower electricity demand Plan, together with extensive unplanned maintenance to address in place until the related debt is settled, with the majority due within the from customers due to challenging economic conditions, together with several critical plant performance challenges. Excluding repairs and next 20 years. the impact of increased embedded self-generation, mainly in the form maintenance, other operating expenditure decreased by 11% to of rooftop solar installations across many sectors. We estimate that R12.7 billion (2023: R14.3 billion). The debt servicing profile remains high over both the short and long more than 6.1GW of behind-the-meter rooftop solar capacity has been term. Debt repayments and interest payments of around R210 billion installed in South Africa. Furthermore, international customers have Net finance costs increased by 4% to R38.4 billion for the year and R120 billion respectively are due over the next five years to had to place less reliance on Eskom supply as they were subject to load (2023: R37 billion). Eskom’s average cost of debt increased to 10.90% 31 March 2029. The remaining R104 billion in direct debt relief from curtailment given South Africa’s generation constraints. (2023: 10.48%), while the average investment return increased to 8.27% Government will greatly assist us in meeting these obligations until (2023: 6.08%). The increase in the cost of borrowing is linked to global March 2026, together with Government’s planned takeover of up to Regrettably, the non-payment of municipal, metro and residential inflation, as well as interest and exchange rate pressure. This was partially R70 billion in debt servicing (principal and interest) at that time. Details accounts continued to negatively affect profitability. Where there offset by growth in finance income due to a higher average return on of the debt takeover are being considered by National Treasury and have is a low likelihood of recovery, revenue from such customers is not treasury and insurance investments, linked to the increase in interest rates. not yet been confirmed. Based on financial modelling, our debt securities recognised and is only accounted for once the cash is received, in and borrowings are expected to reduce by around 40% over the next accordance with IFRS Accounting Standards. Revenue not recognised, DELEVERAGING ESKOM’S BALANCE SHEET five years, to a more sustainable level of approximately R250 billion, net of amounts received on a cash basis, amounted to R8.9 billion for Debt servicing outflows, including both interest and capital, amounted although this assumes a tariff path that moves towards cost reflectivity, the year (2023: R8.2 billion). to R89.8 billion for the year (2023: R72.2 billion). Under the Eskom including a fair return. Debt Relief Act, Eskom received debt relief support of R76 billion Primary energy costs increased by 11% to R173.7 billion (2023: R156.8 billion) from Government in the 2024 financial year, to assist in meeting these After the three-year debt relief period, we have sizeable redemption despite a 4TWh decrease in production. Supply constraints from Eskom’s obligations, with the remainder settled from available funds. The debt relief obligations which will have to be serviced using cash from operations base-load capacity, IPPs and lower imports continued to have an adverse support has been beneficial to liquidity, with cash and cash equivalents and/or potential new borrowings, depending on the trajectory of allowed impact on financial performance due to reliance on expensive Eskom and amounting to R23.6 billion at 31 March 2024 (2023: R7.5 billion). Total debt revenue through the next multi-year price determination (MYPD 6) by IPP-owned OCGTs to avoid or minimise loadshedding and meet customer relief of R64 billion is due to be received during the 2025 financial year. the National Energy Regulator of South Africa (NERSA). To eliminate demand. A combined R33.9 billion was spent to produce 5.1TWh (or the need for further Government support, our financial sustainability is 2% of production) from Eskom and IPP-owned OCGTs during the year Although initially treated as an interest-bearing subordinated shareholder vitally dependent on obtaining appropriate allowable revenue decisions (2023: R29.6 billion to produce 4.1TWh). OCGT production, while critical loan, all amounts received to date under the debt relief have been from NERSA towards a more cost-reflective tariff path that includes a for alleviating supply constraints and reducing the impact of loadshedding, is approved for conversion to equity, based on Eskom’s compliance with the fair return on assets, arresting the escalating municipal arrear debt, and significantly more expensive than other generation sources. strategic conditions attached thereto. The conditions of the Eskom Debt supported by a continued focus on cost efficiencies. 2 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 Credit rating agencies have acknowledged Government’s continued NERSA in September 2024, after consultation with SALGA and National end, with only 10 municipalities honouring their current accounts by support to Eskom. Moody’s upgraded Eskom’s credit ratings with a stable Treasury. NERSA published the retail tariff plan for stakeholder comment November 2024, representing only 2% of the arrear debt balance. outlook in September 2023; there have been no changes since then. In in November 2024, with a decision expected in January 2025. NERSA will May 2024, Fitch affirmed Eskom's credit ratings with a stable outlook, need to make its decision timeously, to allow for implementation of any Due to the low level of compliance, arrear municipal debt has continued based on the continued debt relief support. In November 2024, S&P tariff changes from 1 April 2025. to escalate to unsustainable levels. At 31 March 2024, arrear municipal Global affirmed our credit ratings and revised the outlook from stable debt stood at R74.4 billion (2023: R58.5 billion), an increase of 27% to positive. The ratings agencies’ outlook reflects their view that our In April 2023, we submitted a regulatory clearing account (RCA) during the year. The top 20 defaulting municipalities accounted for 75% of creditworthiness will continue to benefit from Government’s support, application for the 2022 financial year to NERSA. The RCA application the arrear debt, with 29% owed by Free State municipalities. Of concern leading to a strengthening of our liquidity position as the balance sheet is amounted to R23.9 billion in favour of Eskom, driven primarily by since year end is the growth in arrear debt in Gauteng; the top three deleveraged. variances on sales volumes, primary energy and operating costs. In Gauteng metros (Tshwane, Johannesburg and Ekurhuleni) now account July 2024, NERSA awarded an RCA balance of R8.1 billion in Eskom’s for almost 15% of total arrear debt. We are engaging with these metros THE NEED FOR COST-REFLECTIVE TARIFFS favour. We await the reasons for decision as well as NERSA’s decision and pursuing our legal rights through the courts, given that they are not Historically, NERSA’s revenue decisions have not allowed Eskom a return on the timing and recovery of the RCA balance. The amount is not participants in the municipal debt relief programme. commensurate with the necessary levels of debt and associated financing included in the MYPD 6 application. costs. Past revenue decisions also have not adequately catered for risks The Board remains concerned about the overall lack of compliance with associated with bad debts from customers and losses due to electricity Regrettably, there have been no further developments relating to the the programme as the conditions prohibit Eskom from pursuing action theft. The lack of cost-reflective tariffs over the past two decades has RCA decisions for the 2015 to 2018 financial years (MYPD 3), the revenue against non-compliant participating municipalities. Only once a municipality been a key contributor to our financial sustainability and operational and RCA decisions for 2019 or the RCA decision for 2020 (MYPD 4). is removed from the programme, will we be allowed to resume our credit challenges. In part, the unsustainable level of debt accumulated over The legal processes are still underway for these review applications, which control and debt management policies, as well as any legal proceedings. the past two decades is a symptom of insufficient operating cash flows collectively relate to the recovery of an estimated R50 billion. We are in We have requested National Treasury to engage with the non-compliant to fund our debt servicing obligations, largely due to an inadequate discussion with NERSA to agree on a way forward. Should legal processes municipalities to implement remedial action, and they have informed tariff path. However, we have made significant strides in challenging continue, we expect favourable outcomes as our applications adhere to the affected municipalities that their participation in the programme will NERSA’s decisions over recent years, on the basis that NERSA has not principles of the MYPD methodology. However, these legal processes take be terminated should they fail to rectify the breach. Although National implemented the MYPD methodology consistently. time and, given the way that the regulatory process works, any amounts Treasury continues to engage with non-compliant municipalities, no awarded in our favour can only be recovered through future revenue and municipalities have yet been removed from the programme. The migration to cost-reflective tariffs is a crucial step, not just for our RCA decisions by NERSA. This means that we carry the shortfall between financial sustainability, but to foster a competitive future electricity incurring the costs and the receipt of revenue in the future, which has a We have engaged with more than 45 municipalities on our active supply industry, by encouraging investment and enabling market players negative impact on liquidity. partnering programme, including all of the top 20 defaulting municipalities. to operate and maintain their assets in a reliable state. An inadequate The uptake has been extremely poor, with only five agreements in place. tariff path will continue to constrain our financial position, leading to ADDRESSING REVENUE COLLECTION CHALLENGES Most active partnering agreements relate to the provision of technical insufficient investment to sustain and expand our infrastructure, thereby Non-payment of municipal debt is a systemic challenge to the electricity services, including the maintenance of infrastructure, with limited perpetuating past operational challenges. It may also necessitate further industry as a whole. Municipal arrear debt has escalated over the past impact on revenue collection. We have also signed distribution agency reliance on Government support beyond March 2026. decade, with little impact from our past interventions to stem the tide, agreements with two of our largest defaulting municipalities, where given that many of those have been challenged in the courts. Eskom assumes control of the distribution of electricity and billing in the In August 2024, we submitted the MYPD 6 revenue application to municipality’s licensed area of supply. NERSA, which translates to proposed standard tariff increases for the Government’s municipal debt relief programme aims to support our 2026 to 2028 financial years of 36.15%, 11.81% and 9.10% respectively. existing municipal debt strategy and assist in addressing the arrear debt More stringent measures are needed, as defaulting municipalities are The application includes a gradual increase in Eskom’s return on assets challenge. The programme will see Eskom, in consultation with National undermining Government’s efforts to address the energy crisis. Failure to 4%, 5% and 6% respectively (in contrast to 1.58% received for the Treasury, write off the arrear debt balance of eligible municipalities to resolve the municipal debt challenge may require further reliance 2025 financial year under MYPD 5), to minimise the market impact and outstanding at 31 March 2023 over three years, subject to compliance on financial support from Government beyond March 2026 and will enable a migration towards cost reflectivity over time. However, these by participating municipalities with the programme’s conditions. The jeopardise the legal separation of Distribution, by threatening the financial remain far below Eskom’s cost of capital of almost 11%, which NERSA programme was expected to improve payment levels and the settlement viability of the separate Distribution company and, thereby, putting lender has acknowledged. NERSA published the application for stakeholder of current accounts by these municipalities, which will lead to an consent at risk. comment in September 2024, with the public consultation process taking improvement in our operational cash flows over time. A workstream has been established under the National Energy Crisis place during November and December 2024, before NERSA issues its Committee, with the aim of resolving distribution challenges contributing Despite strong uptake on the municipal debt relief programme, with revenue determination. to the energy crisis. A key focus of the workstream is to develop 71 participating municipalities, at year end only 23 municipalities Furthermore, we have prepared a revised retail tariff plan to restructure were complying with the most basic condition to fully settle their a sustainable distribution industry by addressing legacy challenges, tariffs and better address the cost reflectivity of the generation, current accounts on time. Unfortunately, compliant municipalities also including the culture of non-payment, through influencing solutions for transmission and distribution of electricity supply, together with the fixed represented relatively small accounts, accounting for only 12% of the municipalities and Eskom within the changing electricity landscape. and variable components thereof, for possible implementation from R58.5 billion arrear debt balance at 31 March 2023 that is earmarked the 2026 financial year. The revised retail tariff plan was submitted to for write-off. Performance has worsened considerably after year 3 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 OPERATIONAL PERFORMANCE PLANT AND NETWORK PERFORMANCE September 2022 delaying synchronisation and commissioning of the % We experienced a shortfall in supply of about 12.1TWh for the year, unit by about a year. However, the system performance improved 80 emanating from poor Eskom generation plant performance due to high during the second half of the year, assisted by the return to service of levels of unplanned losses; delays in renewable and other IPP programmes three units at Kusile by November 2023 using temporary stacks and the synchronisation to the grid of Kusile Unit 5 by 31 December 2023. 60 that have not yet delivered capacity as expected; and lower-than- budgeted power imports. Due to the inadequate supply capacity being This contributed to easing grid constraints and had a positive impact on available, we were forced to implement loadshedding on 329 days during reducing levels of loadshedding. 40 the year (2023: 280 days) at higher average levels than the previous year, with energy not supplied during loadshedding estimated at 13.2TWh We made extensive use of both Eskom and IPP OCGTs to meet demand during periods of poor base-load generation availability. A total 20 (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 of 5.1TWh was supplied by Eskom and IPP OCGTs during the year continuous loadshedding during the year (2023: 5 557 hours equivalent (2023: 4.1TWh) at a cost of R33.9 billion (2023: R29.6 billion), at load 0 factors of around 17%. OCGTs were utilised to the extent possible within 2020 2021 2022 2023 2024 to 231.6 days). our financial constraints, given the much higher cost of loadshedding to Energy availability factor Unplanned capability loss factor Loadshedding during the financial year, days the country. Planned capability loss factor Stage 1 4 Generation plant availability (EAF) of 54.56% remained lower than the Events/hours Minutes previous year (2023: 56.03%) and significantly worse than the shareholder compact target of 65%. The decrease in EAF compared to the previous 40 5 Stage 2 62 year is largely due to an increase in unplanned breakdowns and losses (UCLF) to 32.34% (2023: 31.92%), offset by a slight decrease in other 4 Stage 3 122 30 load losses outside management’s control (OCLF) to 1.06% (2023: 3 1.66%). Despite the high levels of unplanned losses, planned maintenance Stage 4 66 20 (PCLF) increased to 12.04% (2023: 10.39%), due to an increased focus on 2 the Generation Recovery Plan to improve the performance of the fleet Stage 5 20 over the longer term. Due to the success of addressing the new build 10 1 design defects, the five Medupi units in operation recorded an EAF of Stage 6 55 about 75% for the year. 0 0 2020 2021 2022 2023 2024 The last time we implemented loadshedding was on 26 March 2024. Coal-fired stations recorded an average energy utilisation factor System average interruption frequency index, events Since then, the system has performed much better in general, with no (EUF) of 96.51% for the year (2023: 95.59%), with EUF over 90% at all System average interruption duration index, hours loadshedding being required since then. 14 coal-fired stations. Compared to expected average EUF performance System minutes lost for events <1, minutes of around 75% over the long term and considering the age of Eskom’s Over the winter period (from May to August 2023), average generation fleet, the actual EUF remains substantially above the international norm. unplanned unavailability was 16 513MW, significantly higher than the The high EUF can be alleviated by adding additional dispatchable capacity kg/MWh sent out ℓ/kWh sent out Winter Outlook’s base-case assumption of 15 000MW. Over the and improving generation plant reliability. 1.0 1.50 summer period (from September 2023 to March 2024), average unplanned unavailability was 14 910MW, higher than the Summer Average partial load losses of 6 615MW were higher than the 0.8 1.45 Outlook’s base-case assumption of 14 500MW. previous year (2023: 6 057W), thereby contributing to the poor system performance. Outages that slipped against plan deteriorated, 0.6 Over 4 000MW of Eskom’s capacity (which equates to four stages contributing 3.45% to overall UCLF (2023: 3.18%). Although improving 1.40 of loadshedding) was offline for an extended period, adding to the slightly, post-outage UCLF at 31.61% continued to perform worse than 0.4 constrained system and resulting in elevated levels of loadshedding being expectations (2023: 35.75%). Nevertheless, unit trip performance 1.35 required to balance supply and demand of the grid. This was due to improved significantly since the prior year, with 593 trips during the year 0.2 incidents such as the flue gas duct failure in October 2022 taking Kusile (2023: 736). Generation has established the Trip Reduction Forum to Units 1, 2 and 3 out of service; the generator explosion at Medupi Unit 4 identify and address trends and significant concerns at business units with 0.0 1.30 2020 2021 2022 2023 2024 in August 2021 making the unit unavailable; the planned life extension high numbers of trips, and plant running outside reliable operating limits is outages on both Koeberg units; and the Kusile Unit 5 air heater fire in identified to prevent avoidable trips. Relative particulate emissions, kg/MWh sent out Water consumption, ℓ/kWh sent out 4 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 The boiler tube failure rate (failures per unit per year) deteriorated to Koeberg Nuclear Power Station continues to operate within the required ENVIRONMENTAL PERFORMANCE 2.37 (2023: 2.17), using a 12-month moving average, with boiler tube safety parameters, at the lowest marginal primary energy cost of our Relative particulate emission performance of 0.79kg/MWh sent out failures contributing 2.97% to UCLF (2023: 2.56%). The boiler tube base-load stations. continued to deteriorate since the previous year (2023: 0.70kg/MWh sent failure rate has shown an upward trend over the past five years, largely out), with focused maintenance of the generating plant not yet yielding attributed to the maintenance backlog due to the deferral of outages and Koeberg Unit 1 was shut down on 10 December 2022 for outage results. By March 2024, 16 units across the entire generation fleet were deferred midlife-refurbishments due to constrained capital funding in 126, a planned long-duration outage which included the replacement operating in non-compliance with average monthly emission limits, placing recent years. Over the past year, outage deferrals are estimated to have of the three steam generators. The outage was significantly delayed 9 045MW at risk of being shut down by the authorities. contributed 0.55 to the overall boiler tube failure rate. due to resourcing challenges and unexpected technical challenges experienced as part of the steam generator replacement project. The To address the poor performance, Generation continues its drive Contribution to UCLF, % unit was synchronised to the grid in November 2023 and underwent to entrench a culture of achieving environmental compliance, with a commissioning testing at various power levels with the unit connected to renewed focus on the importance of compliance for sustainable asset 1.61 the grid. Since December 2023, the unit operated at full load until being management while stations are implementing emission recovery actions. 2.84 shut down on 11 September 2024 due to an isolation valve failure. The Load losses are taken by non-performing units and where possible, poor unit was safely returned to service on 20 September 2024. performing units are placed on outage to undertake repairs. 3.45 Koeberg Unit 2 has been in outage since 11 December 2023 to undergo Good progress is being made on the permanent repair solution to the 14.21 a similar long refuelling and maintenance outage to replace its three west stack at Kusile, planned for completion by the end of January 2025. 32.34% steam generators. The steam generators have successfully been placed Despite a further change in scope being required, completion of the main into their final position and the primary welds completed, although some stack remediation is still expected by March 2025. delays were experienced on the secondary welds. Due to the impact of the delays, the unit is expected to return to service in early January 2025. In May 2024, the then Minister of Forestry, Fisheries and the Environment (DFFE) announced her decision on our appeals on the Minimum 10.23 On 15 July 2024, the National Nuclear Regulator (NNR) granted Eskom Emissions Standards (MES), after consultation with the National a long-term operating licence to continue operating Koeberg Unit 1 for Environmental Consultative and Advisory Forum she had established. Partial load losses Full load losses another 20 years. The unit is now licensed to continue operating until The decision was generally favourable to the continued operation of our July 2044 with scheduled maintenance and upgrades being performed in coal-fired power stations. Outage slips Boiler tube leaks line with the licence requirements. These activities will be tracked as part Unit trips of business-as-usual activities over the unit’s extended operating life. The In relation to the power stations that are to close by 2030 – Hendrina, next Unit 1 refuelling outage is scheduled to commence in January 2025, Grootvlei, Arnot, Camden and Kriel – our request for suspension In recent years, outage performance and recovery plans have been after Unit 2 returns to service. of the MES limits has been granted; this affects around 10 000MW hampered by the late release of funds caused by Eskom’s constrained installed capacity. This allows these stations to continue to operate at liquidity position and the consequent need to borrow on the capital The NNR has deferred the decision for Unit 2’s long-term operation, but emission levels achievable using the already installed emission reduction markets. This had a ripple effect on outage readiness for activities such will announce a decision prior to 9 November 2025, which is the date the technologies. We have been directed to submit decommissioning as the ordering of spares and other long-lead materials, issuing of task current licence expires. Once the current outage is complete, Unit 2 will plans within 12 months of the decision. Work to develop these plans is orders and finalising the integrated schedule. The situation has improved be returned to service while awaiting the NNR decision. underway. during the year due to the certainty created by Government’s debt relief, Transmission system minutes lost performed significantly better at For power stations operating beyond 2030, namely Matla, Duvha, with cash from operations being available for allocation to outage funding. 3.29 minutes (2023: 4.71), with one major incident being recorded during Tutuka, Kendal, Lethabo, Majuba, Matimba and Medupi (affecting around At 31 March 2024, all stations were at or above expected stock levels the year (2023: one). Furthermore, Transmission line fault performance 30 000MW installed capacity), we were directed to submit an application (2023: six stations below minimum levels). Normalised coal stock of continued to be impacted by bird-caused and veld fire-induced faults. in terms of section 59 of the National Environmental Management: Air 45 days (excluding coal stock at Medupi) improved significantly due to Bird guards are being installed in priority areas and have resulted in Quality Act, 2004 for an exemption in respect of each of these facilities the programme to recover coal stock levels (2023: 29 days). improvements in targeted areas. from the provisions of the Act within 60 days of the issuance of the decision. We requested until 31 March 2025 to submit the exemption Coal-related load losses contributed 0.75% OCLF during the year Distribution network performance related to the frequency and duration application for these stations, and DFFE granted an extension until (2023: 0.73%), with almost all losses being recorded at Matla Power of customer interruptions improved year-on-year and continued to 10 December 2024. We have assessed several alternatives and published Station. Due to the initiatives implemented, there has been significant perform significantly better than target. However, distribution energy draft exemption reports for public comment. Public participation improvement in the coal quality supplied to Matla from both conveyor- losses, largely due to illegal connections, meter tampering as well as illegal meetings were conducted in November 2024 and the exemption fed coal from the dedicated colliery and other coal delivered by road. vending, continue to have a significant financial and operational impact application was submitted in December 2024. Furthermore, initiatives such as verification sampling have resulted in and remain well outside target at 9.92% (2023: 9.74%). improved coal quality from short- and medium-term suppliers across the The Kendal air quality criminal matter was heard in November 2024 system, which account for around 35% of coal supplied. We continue to and the State presented its case. The matter has been postponed to work with mines on initiatives to improve coal quality. January 2025. 5 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 The air quality offset programme in KwaZamokuhle near Hendrina NTCSA was set up to house the transmission business. Going forward, it is In accordance with the collective agreement concluded during the year, concluded in October 2024, with 3 300 out of a planned 3 500 responsible for increasing grid capacity and ensuring grid stability, to support bargaining unit employees received a 7% salary adjustment as well as interventions having been completed. At Ezamokuhle near Majuba, the the grid connection of much-needed new renewable generation capacity. a once-off payment of R10 000 in July 2023. Managerial employees project concluded in September 2024, with 2 086 out of a planned 2 100 The Transmission Development Plan 2024, which sets out the capital also received an average 7% adjustment in remuneration costs from houses having been completed. In the Sharpeville area, all six waste clean- investment plan to give effect to the grid connection of additional generation October 2023, of which a 4% cost-of-living adjustment was guaranteed ups have been completed. Planning and contracting for further phases of capacity, was published at the end of October 2024. Under the TDP, the for all managerial employees and the remaining 3% was discretionary, to the programme is underway. focus remains on accelerating project development and execution. The retain high performers and correct income differentials. TDP Implementation Steerco has been established to closely oversee the Water usage has deteriorated slightly to 1.43ℓ/kWh sent out delivery of the TDP and to monitor the performance and status of projects in SOCIETAL IMPACT (2023: 1.39ℓ/kWh sent out). Water performance across the fleet execution, with good progress made on enabling delivery against the TDP. During the year, only spend with black youth-owned suppliers achieved continues to be negatively affected by lower load factors and poor water targeted levels. Regrettably, all other preferential procurement spend management practices, as well as the inability to conduct maintenance We installed 74.4km of transmission lines during the year (2023: 326.1km). indicators performed below target, mainly due to expired supplier required to address the issues causing poor water performance. A total The target of 166km was not achieved due to tender pricing challenges B-BBEE certificates and procurement spend under IPP contracts that of 30 water-related legal contravention incidents have been registered which required the issuance of an international tender, thereby are not B-BBEE compliant. These contracts were negotiated by the during the year due to non-compliance with the National Water Act, delaying progress. Transformer capacity of 23MVA was installed and then Department of Mineral Resources and Energy. Eskom continues to 1998 (2023: 58). Focused monitoring of the effective implementation of commissioned (2023: nil). Although the targeted capacity of 160MVA was engage with Government on ways to mitigate the negative effect of these water management action plans, both at power station level and by the successfully cold commissioned, protection scheme challenges delayed contracts on procurement equity performance. Generation Environmental Compliance Steering Committee, have not yet final commissioning beyond the year end. led to a significant improvement compared to the previous financial year, We completed 114 800 connections under Government’s electrification As part of phase 1 of the battery energy storage systems project, programme (2023: 102 590). We further committed corporate social despite some improvement being recorded. construction of the Hex site was completed in June 2023 and the site investment spend of R93.1 million during the year, assisting 272 217 The Medupi flue gas desulphurisation (FGD) project is in the was officially opened in November 2023. The site is operational. Pongola beneficiaries (2023: R63 million to 438 094 beneficiaries). development phase. The request for proposal for the project was and Elandskop sites achieved commercial operation on 15 October 2024. Construction activities continue at Skaapvlei, Graafwater and READINESS FOR LEGAL SEPARATION issued to the market in September 2024. The design, fabrication and Paleisheuwel sites, with construction completion forecast towards the Eskom is implementing the legal separation as set out in the Roadmap construction will follow after contract award, which is expected early end of the 2025 financial year. We expect the contract for Melkhout and for Eskom in a Reformed Electricity Supply Industry issued in October 2019 in the 2026 financial year. The World Bank is regularly informed and Rietfontein sites to be awarded by the end of December 2024. Phase 2 of updated on the status and progress and will be provided with a more by the then Department of Public Enterprises. We are separating the the project is on hold given Government’s debt relief conditions and the accurate programme after contract award to the chosen Engineering, business and forming separate wholly owned subsidiaries to house lack of funds from our own reserves. Procurement and Construction supplier. the transmission, distribution and generation businesses. Several PEOPLE AND SAFETY dependencies and risks have delayed the progress against the initial NEW BUILD PERFORMANCE timelines. These are being attended to and are at varying stages of The lost-time injury rate (including occupational diseases) deteriorated After extensive delays caused by the gas air heater fire at Kusile Unit 5 in completion. to 0.29 (2023: 0.26), with the upward trend due to operational pressures September 2022, first synchronisation to the grid was successfully achieved and an associated increase in overtime. Initiatives have been developed The operationalisation of NTCSA was delayed due to several key policy on 31 December 2023. Since then, the unit contributed energy to the grid, at both Eskom and divisional level to address this concerning trend. Sadly, and regulatory dependencies. All three licences required by NTCSA to particularly over evening peaks, until it went into commercial operation on Eskom recorded two employee and three contractor fatalities during the trade have been granted by NERSA. The buyer role assignment, cost 30 June 2024, adding 799MW of installed capacity to the grid. year (2023: two employee and three contractor fatalities). The loss of any recovery letter and amendment of IPP generation licences were approved On Kusile Unit 6, key commissioning activities are underway, impacted life in Eskom’s service is unacceptable and must be prevented. We offer by NERSA by March 2024. The relevant power supply and power by delays in receiving outstanding boiler and turbine materials at site. our sincere condolences to the affected families, friends and colleagues. purchase agreements with Distribution and Generation were concluded. The unit is expected to synchronise to the grid by February 2025, with All lender consents were received, and 119 contracts with IPPs were Group headcount increased to 40 625 employees at the end of the year commercial operation following around six months later. transferred to NTCSA. Consequently, the suspensive conditions to effect (2023: 39 601). The increase is primarily due to the appointment of core and critical skills in Generation and Eskom Rotek Industries, as well as learners the merger and subscription agreements were met by 31 March 2024, Since inception, the completed interventions to correct some of the resulting in the disposal of the relevant transmission and other related major plant defects have resulted in a steady improvement in the appointed under Government’s Youth Employment Services programme. assets to NTCSA. Transmission employees were transferred to NTCSA availability and reliability of the units at Medupi and Kusile, with some under the same employment contract and with the same conditions of Racial equity improved significantly at senior management level to 78.89% units running at or near full load. The effective correction of the major employment as they had with Eskom. (2023: 76.92%) and at professional and management level to 85.11% plant defects will ultimately ensure that the plant achieves contractual (2023: 83.59%). Gender equity at senior management level improved levels of performance. The first phase of the partial correction of the NTCSA commenced trade from 1 July 2024, with the official launch taking slightly to 42.52% (2023: 42.01%) and also improved to 42.03% at major plant defects at Medupi and Kusile is forecast to be completed place in October 2024. This milestone marks NTCSA’s establishment professional and middle management level (2023: 40.92%). Disability by December 2024. Additional plant defect corrections are forecast for as a duly constituted and distinct wholly owned subsidiary of Eskom. It equity at group level has remained stable at 2.96% (2023: 2.96%), completion after 2027, depending on the extent of technical solutions and is a key milestone in the execution of Eskom’s turnaround plan, and a exceeding the national target of 2%. However, persons living with unit outage availability under the Eskom outage plan. significant step in delivering against Government’s Roadmap to transform disabilities are mostly represented in the lower levels of the organisation. 6 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 the electricity supply industry. NTCSA plays a pivotal role in the country's A full review of the Distribution legal separation programme is being At Executive Committee (Exco) level, Mr Bheki Nxumalo was appointed evolving energy landscape and in dismantling the vertically integrated conducted to incorporate these developments and other specific as Group Executive: Generation with effect from 1 April 2023. business model. It will significantly contribute to addressing the energy considerations which may have an impact on the timelines. The duration Mr Jan Oberholzer retired from Eskom on 30 April 2023 and the position trilemma by enabling a secure, affordable and sustainable electricity of the lender consent phase (initially estimated at about 18 months) will of Group Chief Operating Officer (GCOO) was subsequently removed energy industry. The unbundling of NTCSA is enabling Eskom’s purpose be extended, given the expectation that the lender engagement for from the organisational structure. The executives for Generation, of powering South Africa’s growth sustainably. Distribution will be more complex than the Transmission process. Transmission and Distribution – Messrs Bheki Nxumalo, Segomoco Scheppers and Mondo Bala – who previously reported to the GCOO In support of the transformation of the electricity supply industry, the In this regard, Eskom’s Board remains concerned about the escalating were appointed as members of Exco from 1 June 2023. Electricity Regulation Amendment Act, 2024 was gazetted in August 2024, municipal and metro arrear debt, particularly given court judgments with an effective date of 1 January 2025. It lays the legislative foundation adverse to Eskom and the low levels of compliance with the municipal Ms Nthato Minyuku resigned as Group Executive: Government and for the development of electricity market rules as well as the establishment debt relief programme. Unless these challenges are resolved, they will Regulatory Affairs on 30 April 2023. Ms Mel Govender resigned as Group of an independent state-owned Transmission System Operator within jeopardise the Distribution legal separation, as the arrear debt impacts Executive: Legal and Compliance on 30 June 2023. Mr Jerome Mthembu five years from the Act being promulgated. The Transmission System the assessment of the financial sustainability of NEDCSA. was appointed as Head of Legal and Compliance on 1 May 2024. Operator will provide a platform for generators, consumers, traders and Given the approved corporate structure, the legal separation of The departure of Ms Elsie Pule, Group Executive: Human Resources, retailers to trade with one another, as is the case in other countries around Generation is dependent upon the establishment and operationalisation was announced in June 2024, with her last day on 31 July 2024. To ensure the world. While the exact form of the Transmission System Operator leadership stability and business continuity, Mr Monde Bala was appointed of NewCo. The process and timing of the establishment of NewCo is is being finalised, NTCSA will fulfil this role in the interim; it will purchase to act in the position with effect from 24 June 2024, in addition to his dependent on legislation and Government policy, with the solution likely power from Eskom’s Generation Division, IPPs and cross-border suppliers. role as Group Executive: Distribution, while the recruitment process to require legislative intervention with lengthy timelines to promulgate NTCSA must now apply for the relevant licences to carry out that function. is underway. The fixed-term contract of Mr Vuyolwethu Tuku, Group new or amended legislation, posing a risk to the NewCo operationalisation Work is underway to clarify the role and associated implications set out by Executive: Transformation Management Office, came to an end on timeline. We will engage with the shareholder to solicit further guidance on the Electricity Regulation Amendment Act beyond the transition period of 30 June 2024. the best suited legislative pathway for NewCo incorporation. up to five years. The current focus for the Generation business is finalising the remaining In May 2024, the Group Chief Executive announced a new Exco structure This development facilitates the future transformation of the electricity to further address the current business challenges and future-proof the power purchase agreements, ringfencing all aspects of Generation, and supply industry by enabling more players in the generation sector by organisation to enable growth and long-term sustainability. developing a future-fit Generation operating model and structure that connecting them to the grid and allowing consumers to choose from incorporates its clean energy portfolio. which energy supplier they want to buy power. The commencement The new Exco structure includes a combination of existing and new roles of trade by NTCSA further paves the way for the creation of an OTHER MATTERS to enable responsive decision-making required to deliver on Eskom’s independent market that will enable more participation, competition and BOARD AND EXECUTIVE CHANGES strategic initiatives and navigate the rapidly changing environment efficiency in the electricity supply industry in the medium to long term. On 30 October 2023, Mr Mpho Makwana resigned as Chairman of the in which it operates, including focusing on the expansion of Eskom’s renewable energy portfolio in line with our ambition to increase our Board and Dr Mteto Nyati was appointed as Chairman in his stead. The lessons learnt from the Transmission separation are being clean technology portfolio to support the Just Energy Transition strategy. Furthermore, Dr Rod Crompton resigned on 27 February 2024 as an incorporated into the remainder of the separation process. The focus The structure also includes a focus on the execution of legal separation independent non-executive director. of the separation process is to execute the Distribution legal separation activities and the necessary adaptations for the future generation, followed by the establishment of a new holding company (NewCo), Following an extensive recruitment process, Cabinet approved the transmission and distribution subsidiaries. leaving the Generation business in the current Eskom company, to appointment of Mr Dan Marokane as Group Chief Executive (GCE) in ultimately achieve the formation of three separate subsidiaries under a The following executives were appointed from 1 November 2024: December 2023. Mr Marokane officially joined Eskom on 1 March 2024. new Eskom holding company. At the same time, Mr Calib Cassim, previously acting as GCE after the • Ms Portia Mngomezulu as Group Executive: Corporate Services departure of Mr André de Ruyter in the prior year, returned to the • Ms Nontokozo Hadebe as Group Executive: Strategy and Sustainability The Distribution divisional board had previously supported • Mr Roman Crookes as Group Executive: Group Capital position of Group Chief Financial Officer (GCFO) under a permanent corporatisation (signalled by signing of the merger agreement) of the employment agreement. Mr Martin Buys, previously acting as GCFO, • Mr Len de Villiers as Chief Technology and Information Officer (on a National Electricity Distribution Company South Africa SOC Ltd returned to the position of General Manager: Financial and Management three-year contract) (NEDCSA) by July 2024, readiness for operationalisation in April 2026 Reporting and is no longer an executive director. and commencement of trade in July 2026, subject to various Mr Alfred Seema was appointed as Group Executive: Strategic Delivery dependencies. However, corporatisation and, consequently, the licence At year end, the Board comprised 13 directors, including 11 independent from 1 December 2024. application and lender engagement have been delayed pending the non-executive directors and two executive directors. Subsequent to year publication of Eskom’s annual financial statements for the year ended end, the Board has requested the shareholder to appoint two independent Mr Jerome Mthembu, Ms Natasha Sithole and Ms Jainthree Sankar, all 31 March 2024. The NEDCSA licence application will be submitted non-executive directors to ensure a fully constituted Board of 15 directors. of whom now report to the Group Executive: Corporate Services, and to NERSA and the lender engagement process will commence after The Board has also recommended that the shareholder appoints a lead Ms Faith Burn, who now reports to the Chief Technology and Information signature of the merger agreement. independent director to strengthen governance and oversight. Officer, are no longer members of Exco. 7 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 DEALING WITH CRIME, FRAUD AND CORRUPTION Based on the latest estimate, a profit before tax of over R10 billion While liquidity has improved on the back of the debt relief and better The Board remains committed to enhancing systems, controls, policies, (unaudited) is projected for the 2025 financial year (March 2024: loss operational performance during the first half of the 2025 financial year, processes and reporting structures to address governance and before tax of R25.5 billion), together with a projected improvement in and will improve even further with the recovery of the amount due from compliance challenges and support the fight against crime, fraud and Eskom’s cash position. This is mainly due to an improvement in Eskom’s SARS, several challenges remain. We continue to experience financial corruption. These challenges have garnered extensive media coverage operating cash flows linked to the tariff increase which came into sustainability challenges arising from a below-cost-reflective tariff path; over recent years and have been the subject of external inquiries and effect on 1 April 2024, higher local and internal sales, improved plant above-inflationary cost increases in some areas and the cost of crime, investigations. Over time, they have eroded Eskom’s reputation and performance and lower-than-expected spend on OCGTs, IPPs and fraud and corruption; continued high debt service costs; escalating arrear relationships with key stakeholders and negatively affected operational energy imports, together with the diesel rebate from SARS. municipal and metro debt; combined with high levels of electricity theft. and financial sustainability. The Board acknowledges that addressing these matters will be a lengthy process, but that it is necessary for the success Outlook for the 2025 financial year Eskom’s turnaround plan focuses on addressing these key areas through of Eskom’s turnaround. the Government debt relief, the municipal debt relief programme, as Sales volumes Tariff increase Operating well as a migration to cost-reflective tariffs and driving cost efficiencies. An assessment of Eskom’s crime risk management landscape was 2–3% higher 12.74% expenditure However, to achieve financial sustainability without further reliance concluded by an independent service provider. The assessment focused 20–30% higher on Government support, we need to find lasting solutions to the on identifying risks related to bribery and corruption, financial crime, OCGT spend Primary energy costs Debt servicing tariff challenges, while catering for measures to address affordability physical asset crime, cyber-crime and money laundering. We have begun 60–80% lower 10–20% lower requirements for vulnerable sectors, and non-payment by customers. Furthermore, addressing the findings and recommendations. The Office of the Group 5–15% lower operational sustainability is required to support appropriate sales Chief Financial Officer is overseeing the consolidation and coordination volumes and limit the use of expensive OCGTs. Investment in repairs of this and other similar initiatives to avoid duplication of efforts and and maintenance and capital expenditure to sustain and expand our promote more effective implementation. infrastructure is also needed to facilitate the operational recovery and ensure the continued performance of our plant. We have also appointed a service provider to assist with data analytics EBITDA to identify transactions that must be prioritised for investigation and, R85 billion–R95 billion (2024: R43.4 billion) Successful execution of the Generation Recovery Plan, combined with furthermore, to build this capability within Eskom. Debt service cover ratio interventions under the President’s Energy Action Plan overseen by the 0.90–1.10 (2024: 0.46) National Energy Crisis Committee, have led to a significant improvement We have consolidated the forensics, security and investigative in the reliability, efficiency and availability of the coal-fired generation functions into a single investigative unit, to be established as the Group Gross debt/EBITDA ratio fleet, benefitting the country as a whole. The focus on ancillary plant Investigations and Security (GIS) function, which will have the additional 5.00–6.00 (2024: 11.58) performance, improved risk management, spares availability, quality mandate of implementing recommendations from investigations to ensure Arrear municipal debt balance of outage execution and skills has greatly assisted with the recovery consequence management is effected. Ms Tembela Kulu was appointed R95 billion–R110 billion (2024: R74.4 billion) in performance. The continued hard work and dedication of Eskom’s as General Manager: Investigations and Security from 1 October 2024 employees are moving the utility towards operational sustainability. and reports directly to the Group Chief Executive. A dedicated project It is through their concerted efforts that we have delivered more than management office will address findings from internal and external 250 days of steady electricity supply. investigations as well as data analytics more timeously. OUTLOOK During the first six months of the 2025 financial year, performance at our coal-fired power stations has shown tremendous improvement, leading to the easing of generation supply constraints, with no loadshedding Fix the current business Prepare for competition Modernise the power system Transition responsibly during the period. As a result, Eskom experienced growth in sales and Pursuing financial and operational Facilitate a competitive future Leverage technology Striving for net zero emissions revenue, coupled with a reduction in primary energy costs, which had a sustainability energy industry by 2050 hugely beneficial impact on financial performance. This, together with the Recover EAF to 70% by Obtain NERSA approval for Accelerate TDP execution, Accelerate repowering and debt relief support by Government and the 12.74% tariff increase for the March 2025 unbundled tariffs including alternative funding repurposing initiatives at Komati, 2025 financial year, has led to a significant improvement in liquidity. NTCSA trading by July 2024; models Grootvlei, Hendrina, Camden, Reduce municipal arrear debt and operationalisation of NEDCSA Develop the distribution network, Arnot and Kriel Since year end, we’ve established a programme to enhance operational re-base costs by April 2026 and Generation including smart meters and Collaborate with Government on efficiency and reduce costs, which aims to see Eskom return to Improve controls to address crime, thereafter microgrids optimised MES compliance profitability in the short to medium term. Much of the additional savings fraud and corruption Accelerate clean energy project Use data analytics to create value Participate in distributed energy being targeted will be through primary energy optimisation, procurement Improve leadership stability and development and enhance decision-making resources and drive eMobility efficiencies, digital transformation and capital productivity, together with skills development, and entrench a Fine-tune Generation and Increase flexibility of power system (electrical vehicles and charging revenue growth opportunities. high-performance ethical culture Distribution business models infrastructure infrastructure) 8 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024 The imminent synchronisation to the grid of Kusile Unit 6 will further Government’s debt relief support is paving the way towards improving assist the grid, even though the unit will not be operating at full power financial sustainability and liquidity in the short to medium term. We are until commercial operation in mid-2025. Medupi Unit 4, which has been focused on ensuring compliance with the conditions to ensure that the in extended inoperability since a generator explosion in August 2021, is support, which initially comes in the form of a subordinated loan subject also expected to return to service by March 2025 using a second-hand to market interest rates, is converted to equity, to realise the full benefit stator. thereof. Our collective focus remains on further reducing unplanned unavailability. Despite the many challenges, Eskom must be placed on a more We aim to reach an EAF level of 70% during the month of March 2025 sustainable footing through our turnaround plan, for which we require and an average EAF for the year of around 62%, by improving the the support of all our stakeholders. Ultimately, this requires resolving availability of the generation fleet through effective implementation of Eskom’s highly leveraged balance sheet, below cost-reflective tariff the Generation Recovery Plan, which includes carrying out extensive structures and the municipal arrear debt challenge; delivering on our planned maintenance. This will be delivered through an intensified focus operational recovery to improve the performance of our generation plant on recovering performance at eight priority stations, while sustaining and alleviate the constrained power system; and bringing much-needed performance at stations that already deliver reliable performance. structural reforms to the electricity industry. Initiatives continue to recover and increase available capacity to meet demand, with sustained improvements achieved at most of the eight Remember, if it is to be, it is up to us! priority stations. FORWARD-LOOKING STATEMENTS Certain statements in this commentary 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 commentary, whether as a result of new information, future events or otherwise. 9 ESKOM HOLDINGS SOC LTD Performance commentary | 31 March 2024