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    TechCentralTechCentral
    Home » Energy and sustainability » Eskom heads deeper into financial crisis with record loss

    Eskom heads deeper into financial crisis with record loss

    By Agency Staff15 January 2019
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    Eskom expects to report a loss of more than R15-billion in the year to 31 March, a record for any state-owned company.

    The anticipated loss, revealed by chief financial officer Calib Cassim at a tariff application hearing in Cape Town on Monday, will exacerbate Eskom’s already dire financial position — it is saddled with R419-billion of debt — and increase pressure on the government to help bail it out.

    The utility has said its situation is unsustainable and suggested the state take some of its debt onto its own balance sheet, an option not favoured by President Cyril Ramaphosa.

    We are now expecting a loss closer to R20-billion for the year, despite a reduction in the investment pace

    Eskom’s loss estimate may be on the conservative side, according to Peter Attard Montalto, the London-based head of capital markets research at Intellidex, a research company.

    “We are now expecting a loss closer to R20-billion for the year, despite a reduction in the investment pace,” he said.

    The loss of about R15-billion was targeted notwithstanding that Eskom may need to spend more on capital expenditure and maintenance, the utility’s media desk said in an e-mailed reply to questions.

    A turnaround plan is currently being discussed with government, and will be made public once the process has been concluded, while talks are being held with a number of lenders to secure required funding, it said.

    ‘Significant loss’

    The department of public enterprises, which oversees the utility, didn’t immediately respond to messages seeking comment.

    Eskom has proposed that it be allowed to raise tariffs by 15% annually for three years to help it bring its debt under control, but Attard Montalto sees it as unlikely that South Africa’s power regulator will grant its request because it abides by a strict formula when determining how costs should be allowed to feed into prices.

    “With Eskom likely to get a lower award than asked for, it is likely to run a significant loss in the next fiscal year as well,” he said.  — Reported by Paul Burkhardt, with assistance from Karl Maier, (c) 2019 Bloomberg LP



    Calib Cassim Cyril Ramaphosa Eskom Peter Attard Montalto top
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