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    Home » News » Eskom reassures public on cash position

    Eskom reassures public on cash position

    By Sapa Reporter25 April 2014
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    Eskom’s cash flow situation is “very stable”, the power utility said on Friday.

    “Eskom would like to reassure the nation at large that its cash flow situation is very stable,” the company said in a statement.

    The power utility managed its cash flow in a responsible manner, and always made sure it had sufficient liquidity.

    The company had stated for some time, due to the National Energy Regulator of South Africa’s (Nersa’s) decision in 2013 to allow Eskom an 8% annual tariff increase, that it was left with a R225bn shortfall between 2013 and 2018.

    Following Nersa’s decision, Eskom engaged in an internal efficiency process to determine where the shortfall could be offset.

    “The solution had to take into account all possible elements, efficiencies, deferral, cessation of activities, additional debt finance, including equity/equity-like instruments,” the company said.

    While the R225bn revenue shortfall had been closed out via the internal efficiency process, it had left Eskom’s credit metrics showing negligible growth over the tariff increase period.

    The company saw this as “inappropriate” as it sought to be a fiscally responsible entity, and where possible limit undue dependence on government, its shareholder.

    “It is in this context that Eskom, through its shareholder ministry, the department of public enterprises, is in discussion with the national treasury to find a long-term solution,” Eskom said.

    It was too early to mention how a solution might be reached, or how much money such a solution might equate to, as discussions were currently underway.

    Eskom had also submitted a regulatory clearing account (RCA) application to Nersa, for the previous period of tariff increases it had approved in 2010.

    “Through this process, the regulator is reviewing whether what it awarded Eskom previously, based on its forward estimates of costs such as coal, stacks up against the costs that have actually been incurred over the period.

    Nersa would make its own pronouncement on that, with an RCA being a normal process, Eskom said.

    “The utility [Eskom] is acutely aware of its obligations and will continue to access financial markets efficiently and will prioritise this in its decision-making as it actively continues to manage its finances.”

    The power utility was also exploring all other avenues of potential funding, as any business would.  — Sapa



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