Johannesburg - Eskom has posted an R8.4 billion profit which will be reinvested into the business, Public Enterprises Minister Malusi Gigaba said on Monday.
Last year, Eskom posted a surplus of R 3.6 billion. The R8.4 billion profit was mostly attributed to tariff increases.
"Eskom is reinvesting the entire surplus to create new capacity," Gigaba said at the announcement of the results for the year ended 31 March 2011. The funds would be used for electricity infrastructure.
The minister said Eskom had performed well. "Eskom has kept the lights on ... even though the demand for electricity increases. Electricity supply is the pulse of the nation. It is essential for economic growth, investment and job creation."
The minister added that the parastatal had managed to turn a corner. In 2009, Eskom had posted a R9 billion rand loss. Gigaba noted that many challenges still remained, including that of a tight energy supply.
Among some of the highlights of the results was that 80 percent of new build contracts signed by the parastatal in the financial year were of local content, while R41.9 billion was spent on Broad Based Black Economic Empowerment.
Chief executive Brian Dames said he was pleased with the results, and that Eskom was now better placed to face challenges. He said most of the volatility had been stripped out.
Dames also expressed disappointment at the safety aspects at the parastatal, which resulted in 43 public fatalities, while six employees were also fatally injured. "Safety performance was disappointing. Vehicle incidents are a concern," he said.
The parastatal reported strong profitability in the first half of the year, which includes higher tariffs and high demand winter months when maintenance is low.
Electricity sales at 224 446 GWh were 2.7 percent higher than in 2010, reflecting an improving national economy, although growth was lower than expected. Group revenue increased by 28.6 percent to R91.4 billion, driven primarily by the tariff increase granted by NERSA as of 1 April 2010.
Eskom's finance director Paul O'Flaherty said the company's R300 billion funding plan was on track, with approximately 71 percent of it secured.
As for its carbon footprint, outgoing chairman Mpho Makwana, who will be replaced by Zola Tsotsi, said Eskom was a major contributor to the country's CO2 footprint and this needs to be reduced.
Makwana said he was bidding farewell to the company on a positive note. "We believe we do so leaving an organisation much better than the way we found it [as the outgoing board]."
Eskom is a major driver of the South African economy, estimated to account for approximately three percent of the country's Gross Domestic Product (GDP).
"Eskom is one of the largest employers and buyers in the country. The new build programme sources more than 50 percent of all content locally and recruits the majority of workers from local communities," said Dames.
Earlier, Eskom held its general meeting.
On Monday morning, Greenpeace activists off-loaded five tonnes of coal at the entrance of the parastatal's Megawatt Park offices. The off-loading of the coal was a means to publicly demand that Eskom stop the construction of the Kusile coal-fired power station.
