ESKOM, which has recorded a massive R9,7billion loss in the year to March, is looking to plug an R80billion funding shortfall and ranks financial stability as its biggest challenge.

Results for the year to March show an operating loss of more than R3billion as profitability was affected by high coal prices and other costs, a huge fair value loss on embedded derivatives, and finance costs of R314million on its growing debt.

Sales were down 4,2percent as the recession affected demand, and gearing up from 40percent to 122percent as it borrowed more to fund its capital expenditure plan .

The results reflect Eskom's bid to catch up on years of insufficient investment in infrastructure development.

It is now building power stations, and it spentR30billion on its building programme during the year.

It expects to spend R385billion up to March 2013.

On the positive side, the critical reserve margin has increased to 14percent from 5percent, and coal stockpiles have been increased to 41 days from 12 days.

Since 2005 Eskom has commissioned 4454MW and another 6814MW will come on stream in five years.

Chairperson Bobby Godsell said the results "clearly indicate that financial stability was now Eskom's single, central challenge".

He said electricity costs were too low and Eskom could not fund its expansion with tariffs.

Chief executive Jacob Maroga said the past year was characterised by recoveryfollowing the power crisis.

He said this year the key issue was returning to financial stability. Funding could come from a shareholder loan, external debt and revenue, and that Eskom was pursuing all thesepossibilities.

Maroga added that Eskom would not cut back on essential expenditure that is key to security of supply.