Eskom's financial recovery strengthened sharply in 2025/26, but the utility's results also expose how dependent its outlook remains on tariff increases, cost containment and finding new electricity demand. Profit after tax more than doubled to R30.3-billion from a restated R14-billion, while revenue rose 4.1% to R354.7-billion. However, electricity sales fell 6.2% to 178 TWh, meaning higher revenue was achieved largely through the 12.74% standard tariff increase rather than volume growth. A major boost came from improved coal-fleet performance and sharply lower use of diesel-fired open-cycle gas turbines. Eskom's combined OCGT fuel, storage and IPP OCGT costs fell by R10.6-billion year-on-year. That saving flowed directly into earnings, although another fall of similar magnitude cannot be repeated indefinitely once diesel use reaches structurally low levels. Coal-related costs were also contained by lower coal burn, but employee costs moved firmly in the opposite direction. Average remuneration increased 7%, staff numbers rose 3%, while production bonuses and short-term incentives added further pressure. The balance sheet was additionally supported by R80-billion in government debt relief received in March 2026. This is a temporary prop: after the amended debt-relief programme, only a final R10-billion payment is scheduled for 2028/29 before taxpayer support ends. The harder challenge is demand. Industrial sales plunged 22.5%, and Eskom is now trying to monetise 2 GW to 3 GW of surplus capacity through discounted negotiated pricing agreements for ferrochrome and manganese smelters. CEO Dan Marokane is also targeting data centres, electric-vehicle charging, exports and even flexible Bitcoin-mining loads. Eskom is therefore emerging from crisis, but its next test is structural: sustaining profits when extraordinary diesel savings and government support fade, while electricity volumes continue to decline.

South Africa's two biggest industrial polluters face intensifying scrutiny as new health research, worsening emissions and court action expose the continuing human, environmental and financial costs of pollution. A new assessment by the Centre for Research on Energy and Clean Air (CREA) estimates that emissions from Sasol's Secunda coal-to-liquids complex contribute to about 1000 premature deaths a year, 1100 preterm births and 23,800 years of life lost, imposing an annual economic cost of about R19-billion. Sasol says it is reviewing the methodology and cautions against attributing health outcomes to a single source in the heavily polluted Highveld. The company is simultaneously under renewed investigation over allegations that hazardous chemical waste from its Secunda Benfield operations was unlawfully discharged into the Klipspruit River. National Prosecuting Authority investigators executed fresh search warrants in August, while Sasol maintains there is no basis for criminal proceedings.

Eskom's environmental performance has also deteriorated sharply. Particulate emissions from Eskom coal-fired power stations rose 53% in 2025/26, from 0.64 kg/MWh to 0.98 kg/MWh sent out - almost three times Eskom's 0.35 kg/MWh target. Meanwhile, delays to the R41.7-billion flue-gas desulphurisation retrofit at Medupi could trigger early repayment obligations under Eskom's $3.75-billion World Bank loan. The retrofit is intended to cut sulphur-dioxide emissions.

Adding to the pressure, the Supreme Court of Appeal ruled in August that Eskom had breached environmental and water-use legislation at Kusile, ordering corrective action after pollution affected downstream water resources. These developments highlight a growing collision between ageing coal-based industrial infrastructure, environmental compliance, public health and financial sustainability - with regulators and courts increasingly unwilling to tolerate continuing non-compliance.

South Africa's long-running electricity sector restructuring has acquired a firmer deadline, with government now targeting 31 December 2027 for establishment of a fully independent, state-owned Transmission System Operator (TSO) outside Eskom. The date appears in a National Treasury request for proposals for a transaction adviser to structure and execute the separation. Significantly, the mandate explicitly excludes reconsideration of the policy decision: the new TSO is to own and control the transmission network, operate the electricity market and provide non-discriminatory grid access.

This appears to settle months of mixed messaging. President Cyril Ramaphosa stated in his February 2026 State of the Nation Address that the independent TSO would own and control transmission assets. In July 2026, he endorsed the Phase I report of the Eskom Restructuring Task Team confirming this model. Yet Eskom Chairman Mteto Nyati subsequently questioned whether transmission assets should leave the Eskom group, citing financial sustainability, lender requirements and execution risks.

Eskom had earlier proposed a model in which the TSO would operate the grid and market while transmission assets remained in an Eskom Holdings subsidiary. The resulting clash with Business Leadership South Africa prompted intervention by Ramaphosa. Following meetings with the President and BLSA, Nyati backed the government's TSO-with-assets policy, while stressing that implementation must not undermine Eskom's financial position.

The National Transmission Company South Africa (NTCSA), operational since July 2024, therefore remains an interim Eskom subsidiary rather than the final independent TSO. Although the Electricity Regulation Act allows until end-2029, Treasury's end-2027 target brings the reform forward by two years. The challenge now shifts from policy to execution: transferring assets, staff, contracts and debt obligations while securing lender consents and creating a genuinely independent transmission company.

South Africa has opened a new front in the electricity affordability debate, publishing a revised draft Electricity Pricing Policy (EPP) while consumers face another above-inflation Eskom increase in 2027/28. Gazetted on 28 August 2026 for comment by 28 September 2026, the draft replaces the 2008 policy and seeks to align pricing with a restructured electricity industry, private generation, trading, wheeling and distributed energy. It is said to promote transparent, unbundled charges across generation, transmission, distribution and retail, cost-reflective tariffs, explicit cross-subsidies and protection for vulnerable households.

The policy also seeks to prevent paying customers from automatically carrying costs arising from non-payment, theft and excessive network losses, while recognising that solar-equipped customers using the grid for backup must make a fair contribution to network costs. But affordability remains the immediate problem.

NERSA's redetermination of Eskom's MYPD6 revenue allows an average 8.83% increase from 1 April 2027, compared with the South African Reserve Bank's 3% inflation target. The increase includes the effect of correcting NERSA's earlier regulatory-asset-base calculation mistake.

Civil society is pushing back. OUTA argues that repeated above-inflation increases are unsustainable, particularly after Eskom returned to profitability while electricity sales continue falling. A Better Governance Initiative petition opposing the 8.83% increase had attracted more than 5,800 signatures by 10 September 2026.

The tension is becoming increasingly obvious. Eskom sold 6.2% less electricity in 2025/26, while industrial sales plunged 22.5%, yet higher tariffs lifted revenue. Energy-intensive industries are meanwhile seeking negotiated discounts to remain viable. Government argues that competition, efficiency and a modernised pricing framework should ultimately restrain costs. The draft EPP is said to move policy in that direction, but consumers face a more immediate reality: electricity prices are still rising far faster than inflation, further encouraging efficiency, self-generation and declining grid sales.

Renewable-energy investment continues to broaden across Southern Africa, with new municipal power-purchase agreements in Cape Town, private project finance in South Africa and fresh utility-scale developments in Zambia and Mozambique. Cape Town has signed its first two long-term agreements under a programme to procure up to 200 MW from independent producers. The 20-year PPAs cover 30 MW from Jempec at Atlantis and 40 MW from Make A Difference at Philippi. The City says electricity from the projects will cost 19% to 21% less than current Eskom rates, with future increases linked to CPI rather than Eskom tariff movements.

Elsewhere in South Africa, Yellow Door Energy has reached financial close with Nedbank CIB on the 49 MWp Lion Thorn Solar Park at Leeudoringstad in North West province. The project has long-term PPAs with cement producer PPC and electricity trader PowerX. Construction is due to start in September 2026, with commissioning expected in 2028.

South African developer and IPP Sturdee Energy is meanwhile entering Zambia through acquisition of the late-stage 200 MW Masaiti Wind Project in the Copperbelt. The project will connect to a nearby Zesco 330 kV line, with Zesco as anchor customer and potential sales through traders, bilateral contracts and the Southern African Power Pool. Sturdee also plans to integrate solar and battery storage to provide a more consistent 24-hour renewable profile.

In Mozambique, Canadian developer JCM Power has been selected to develop the 30 MW Manje solar project in Tete Province under the PROLER competitive renewable-energy procurement programme. JCM will finance, design, build, operate and maintain the plant.

The above projects illustrate an increasingly diversified regional market, spanning municipal procurement, private PPAs, cross-border trading and competitive public renewable-energy auctions.

Regional oil and gas investment is gathering momentum, with TotalEnergies expanding its upstream position in Angola while major LNG infrastructure advances in neighbouring Mozambique. In Angola, TotalEnergies has announced the Acacia-5 oil discovery on offshore Block 17, where it holds a 38% operating interest. The discovery, made in June 2026, is being fast-tracked through existing capacity on the Pazflor FPSO, with first oil targeted just three months after discovery and additional production of about 6000 barrels a day.

The group has also agreed to acquire 40% operated interests in exploration Blocks 17/25 and 32/21 in the Lower Congo Basin. CEO Patrick Pouyanné says TotalEnergies and its partners plan to invest about $10-billion in Angola over the next five years as they seek to sustain production from maturing offshore fields. TotalEnergies currently produces about 450,000 barrels a day in Angola and is developing the $6-billion Kaminho project, with first production expected in 2028.

Meanwhile, Mozambique LNG is moving visibly from restart to execution. The STINGRAY pipe-laying barge arrived in Palma Bay in August 2026 to install five pipelines and two umbilicals across a 17.7 km shallow-water corridor connecting Area 1 offshore infrastructure with the Afungi LNG facilities. Deep-water installation is expected to follow from the second quarter of 2027.

The $20-billion-plus Mozambique LNG project, operated by TotalEnergies, resumed fully in January 2026 after force majeure was lifted in late 2025, with first LNG currently targeted around 2029.

The above developments underline renewed investor confidence in Southern Africa's hydrocarbons sector, driven by existing infrastructure, large offshore resources and growing international demand for diversified oil and LNG supply.

South Africa is stepping up efforts to strengthen domestic fuel security, with plans to revive refining capacity in Durban while regulators and industry grapple with the looming decline in piped gas supplies from Mozambique. The Central Energy Fund has outlined a three-phase redevelopment of the mothballed Sapref refinery, bought from BP and Shell for R1 in 2024.

The first phase would use existing tanks and transfer infrastructure to support fuel imports, while a second phase envisages rebuilding refining capacity to about 400,000 barrels a day. A later expansion could lift throughput to between 400,000 and 650,000 barrels a day. No funding package or implementation timetable has yet been announced.

The initiative reflects South Africa's growing dependence on imported fuel, which now supplies more than 60% of finished-product demand following the closure or mothballing of several refineries. Gas security presents an equally pressing challenge.

NERSA has approved Sasol Gas maximum prices through March 2028, including an initial end-user ceiling of R97.31/GJ and quarterly adjustments linked to acquisition costs. Increases above 10% in any quarter require further regulatory approval.

Sasol plans to bridge declining Mozambique gas supplies with methane-rich gas from Secunda from July 2028 to June 2030, before longer-term LNG imports are expected to take over. However, investment decisions depend heavily on regulatory certainty, pricing and sufficient customer demand.

Meanwhile, higher global oil prices have provided Sasol with a near-term earnings boost, with adjusted EBITDA rising 17% to R60.7-billion in 2025/26. These developments indicate a renewed policy focus on domestic energy resilience after years of refinery closures, import dependence and delayed gas-supply decisions.

Municipal electricity distribution is emerging as a major South African infrastructure and governance risk, with debt, corruption allegations and service failures mounting even as national electricity reforms gather pace. At Emfuleni, police have arrested an eighth suspect believed to be the mastermind behind an alleged illegal electricity-connection syndicate involving municipal employees and service providers. The group allegedly instructed customers to pay money into private accounts to have disconnected supplies restored, costing the municipality almost R10-million in lost revenue.

The wider municipal debt crisis is severe. Arrears owed to Eskom have reached about R119-billion, while National Treasury is pushing Distribution Agency Agreements under which Eskom would manage distribution, revenue collection and technical operations in defaulting municipalities. Fourteen municipalities faced a 1 September 2026 deadline to conclude such agreements, but none had done so by the eve of the deadline, amid legal and procedural objections from SALGA and others.

Johannesburg provides another warning. The City and City Power have now settled R5.25-billion in overdue Eskom debt, prompting Eskom to withdraw its process that could have led to supply interruptions. OUTA welcomed the move but warned that the underlying governance and revenue-management problems remain unresolved.

At the same time, City Power disconnected the Children's Memorial Institute in Parktown over a R44-million billing dispute, cutting supply to 22 NGOs, an autism school and a provincial hospital laundry serving multiple healthcare facilities.

The economic consequences are widening. Citi Bank economist Gina Schoeman says deteriorating municipal infrastructure is offsetting gains from national electricity and logistics reforms and holding back business confidence. The pattern is increasingly clear: South Africa's electricity crisis is shifting from generation to distribution, where weak governance, failing infrastructure, rising debt and poor revenue collection now threaten service reliability and economic recovery.

Development finance institutions are stepping up support as African economies confront rising energy and fertiliser costs, while South Africa seeks to stabilise deteriorating municipal infrastructure and essential services. The African Development Bank has approved a new Global Energy and Fertiliser Crisis Response Framework providing up to $5.1-billion to African countries exposed to price and supply shocks arising from the continuing Middle East crisis.

The one-year facility, effective from September, comprises an additional $4.1-billion in AfDB lending and up to $960-million from the African Development Fund, its concessional financing arm. It lifts the bank's 2026 lending target to about $12.7-billion. Funding will support macroeconomic stabilisation, energy, food and fertiliser supply security, vulnerable households and longer-term measures to reduce dependence on volatile imports.

Separately, Germany and France have committed €300-million, about R5.6-billion, in concessional financing to South Africa's National Treasury for its Metro Trading Services Reform programme. The package comprises €200-million from Germany's KfW Development Bank and €100-million from France's Agence Française de Développement (AFD).

It targets electricity, water, sanitation and waste services across South Africa's eight metropolitan municipalities, collectively serving more than 22-million people. The funding forms part of German and French Just Energy Transition commitments and is intended to improve governance, financial sustainability and operational performance, while enabling revenue from municipal trading services to be reinvested in ageing infrastructure.

It follows a separate $1-billion New Development Bank facility announced in June for infrastructure upgrades across the metros. The above initiatives illustrate the growing role of concessional and development finance in cushioning immediate economic shocks while addressing deeper structural weaknesses in Africa's energy, food and municipal infrastructure systems.

South Africa's energy sector is seeing notable leadership changes, with a new chief executive at the South African National Energy Development Institute (SANEDI), a long-serving Eskom executive heading for retirement, and uncertainty continuing over the future of Eskom Chairman Mteto Nyati. Cabinet has approved Prudence Madiba's appointment as CEO of SANEDI.

Madiba, a professionally registered electrical engineer and Fellow of the South African Institute of Electrical Engineers (SAIEE), moves from Eskom, where she served as General Manager for Research, Testing & Development. She brings more than two decades of Eskom experience spanning research, innovation, technical strategy and operational improvement.

At Eskom itself, Group CFO Calib Cassim will retire during the financial year ending March 2027, drawing a line under a 24-year career at the utility. Cassim joined Eskom in 2002, became CFO in 2017 and served as acting group chief executive during 2023/24 after André de Ruyter's departure. Eskom says recruitment of his successor is under way, aiming to have the new CFO in place before the end of FY 2026/27.

Meanwhile, Nyati's position remains unresolved as his term as chair ends in October 2026. Electricity & Energy Minister Kgosientsho Ramokgopa has publicly indicated that he would prefer Nyati to remain, arguing that Eskom's operational and financial recovery supports continuity in leadership. However, the decision rests with Cabinet, and Nyati's recent public differences with government and organised business over future ownership and control of transmission assets have added political sensitivity.

The coming weeks will therefore test whether Eskom opts for board-level continuity while simultaneously managing an important executive succession and the wider restructuring of the electricity industry.