Eskom loss 'result of bad management' - TechCentral

Eskom loss ‘result of bad management’

Eskom's Komati power stationThe “shocking” R9,7bn loss posted by Eskom this week was the result of years of bad management, the Cape Chamber of Commerce
said on Thursday.

In the five years before the blackouts started, Eskom made a profit of R33,5bn, said chamber director Albert Schuitmaker. Most of that money had gone to the government in taxes and dividends instead of being used to improve maintenance, train staff  and preserve coal stocks.

Now the picture was one of declining reserve margins of electricity, while stocks of coal were run down to the point where the country had been plunged into darkness. “Eskom produced some great balance sheets, but it is now clear that they concealed more than they revealed,” he said.

Some people were trying to blame the National Energy Regulator of SA (Nersa) for limiting electricity tariff increases in the boom years. “But how could Nersa approve bigger price increases when Eskom profits were R9,5bn in 2007, R6,6bn in 2006, R7,8bn in 2005 (a 15-month financial year), R5,3bn in 2003 and R5,5bn in 2002?” he asked.

The chamber would like to believe Eskom had learned from the crisis, but there was reason for serious doubt.

Eskom’s financial loss came even after the power utility upped its tariffs in 2008 and again this year.

The company warned that there was also a funding shortage of R80bn needed for expansion. “Eskom is working urgently with both government and Nersa to close this gap and is confident that this can be done,” said Eskom chairman Bobby Godsell.

“Should we not be able to close the gap, we will have to introduce delays in some parts of the build programme. Not only will this reintroduce the possibility of supply failures, it will also curtail real economic activity at a time when the SA economy most urgently needs it,” he said.

Eskom CEO officer Jacob Maroga told the presentation that the year under review had been mainly about “keeping the lights burning”.

For the first part of the year, Eskom undertook extraordinary measures to recover the power system following the events of 24 January 2008, he said. “The extraordinary measures have come at a cost to Eskom’s bottom line,” Maroga noted.

He said that compared to the previous year, the sale of electricity decreased by 4,2%, because producers of ferrochrome and steel switched off their furnaces for part of the year as a result of weak commodity prices and low demand.

However, Maroga said that “a crisis was a terrible thing to waste,” and that it had caused Eskom to “step back and reflect.”

This, he said, had resulted in an improvement in the health of the country’s power system and an increased resilience on the part
of Eskom.

Turning to security of supply in 2010, Maroga said Eskom was confident that it had adequate electricity supply for the Fifa World Cup to

be played in the country in July. “We have had a successful Confederations Cup from the power supply point of view… It was a good dry run. We will make sure that Bafana Bafana goes to the final with the lights on,” he said.

Asked if any power cuts could be expected during the next 12 months, Maroga replied that the risk of deliberate power cuts was “very
low”.

“However, variables can change but we are in a better place compared to where we were last year,” he said.  — Sapa

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