It’s been a bitter first quarter for Eskom employees. After recent disputes over salary wages, the state-run power firm Eskom reported a 2.3 billion rand ($171 million) loss on Monday, 23 July 2018 underlining the enormity of the task facing President Cyril Ramaphosa, who has pledged to turn the company around.
Eskom suffered a net loss of R2.3bn in 2018, compared with profit from the previous year, the state-owned power producer revealed at its financial results presentation on Monday.
The power utility said its net cash from operations declined from R45.8bn to R37.6bn, as it struggled with leadership and operational challenges.
Speaking at the announcement of Eskom’s financial results, the company’s Group Chief Executive Phakamani Hadebe said: “Despite satisfactory progress being maintained on the new build programme, as well as improved operational performance for the current financial year, Eskom continues to face significant challenges in the short to medium term. Revenue levels remain unsatisfactory, and the tariff increase of 5.2% for the current financial year further compounds the impact of the 2.2% tariff we received last year, and is therefore not expected to lead to much improvement.”
Hadebe added that: “Levels of arrears debt, especially from municipalities, remain unacceptably high. In the short term, our focus will remain on cost efficiencies to support financial sustainability.”
Eskom Chair Jabu Mabuza also said there had been R19.6bn in irregular expenditure since 2012, with much of the irregular expenditure being reported in 2018.
“The qualified audit must be looked at within the perspective of our intensified efforts to clean up which has in the medium term surfaced further irregularities. While we are disappointed that a qualified audit could not be avoided, we are comfortable that great strides have been made in our key focus areas with a number of initiatives being set in motion to address our key challenges in a sustainable manner.”
“Our challenges cannot be fixed overnight, as the damage was also not done overnight. We have to take some short-term pain to achieve the long-term gains and the Eskom of the future we all want to see,” Mabuza said
Eskom supplies more than 90 percent of South Africa’s electricity, and ratings agencies regularly cite its 220 billion rand of government-guaranteed debt as a threat to the country’s sovereign credit ratings.
By Neo Sesinye
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