Johannesburg - Eskom said full-year profit rose 37 percent after gains in negotiated pricing contracts countered flat electricity sales.

Net income climbed to 7.1 billion rand in the year ended March 31 from 5.2 billion rand a year earlier, the Johannesburg-based company said in a statement.

The utility reported a 2.1 billion-rand gain on derivatives related to negotiated pricing agreements and changed in the rand-dollar exchange rate, with the local currency weakening 12 percent in the reporting period.

Electricity sales rose 0.6 percent to 217,903 gigawatt-hours.

The profit “will be reinvested in the company to fulfil and support our capacity expansion program as well as to be able to service our debt,” finance director Tsholofelo Molefe told reporters.

Eskom, which has a 225 billion-rand funding shortfall over the five years through March 2018, is struggling to supply sufficient power to the continent’s second-biggest economy after a decade of underinvestment in generation.

It resorted to rolling blackouts for the first time in six years in March after rains disrupted supplies of coal.

The construction of what will be Africa’s two largest coal-fired plants has been beset by delays for more than two years.


Plant Progress


“We are confident that we will be able to put first power on the grid in December” at the 4,764-megawatt Medupi plant and start full commercial operations six months later, acting chief executive Collin Matjila said.

“The problems have now been sorted out on both sides and we have seen a more intense focus and progression.”

The company charged an average of 62.82 cents per kilowatt-hour in the period, 7.4 percent more than a year earlier.

The National Energy Regulator of South Africa, which determines how much the state-run utility can charge, allowed Eskom to raise tariffs by an average of 8 percent annually for the five years to 2018, half the increase sought.

That may be increased further starting April 1, 2015, should Nersa find that the company’s actual costs in the three years through March 2013 exceeded projections.

Nersa will announce its decision at the end of this month.

To close the gaps, Eskom is considering a variety of funding options, including the issuing of international bonds, Treasurer Caroline Henry said.

The company “is just getting ourselves fit for it as we’re not going to do something about it now, but we’re definitely going to do something about it this financial year,” she said. - Bloomberg News