STATE-OWNED power utility, Eskom, posted a fourth consecutive annual loss as it continued to service a mountain of debt, repaired aging plants and lost electricity revenue because of a drop in demand caused by the coronavirus pandemic.
Eskom Holdings SOC Ltd.’s loss narrowed to R18.9 billion in the year through March, from R20.8 billion a year earlier, Chief Executive Officer Andre De Ruyter said at a televised briefing on Tuesday.
“The slowdown of economic activity due to the pandemic led to an unprecedented decline in sales, which fell 6.7% from the previous year. Sadly, the losses Eskom suffered as a result of the COVID-19 pandemic were not limited to our finances. We also lost 153 of our colleagues to the pandemic, including 17 contractors as at Friday 27 August 2021. Our sincere condolences go to the affected families,” said De Ruyter.
“Operationally, however, every crisis does bring with it an opportunity. In this case Eskom used unfortunate lower demand presented by the lockdown to conduct much-needed maintenance at some of our power stations.”
After growing unabated for about 15 years, the utility’s gross debt fell 17% to 401.8 billion rand, thanks to a cash injection from the government, but it remains unsustainably high and plans are being made to reorganize it.
Electricity dropped 6.7% because of lockdown restrictions to curb the spread of Covid-19, the company said in a statement.
The loss comes despite an R81.9bn drop in Eskom’s gross debt burden, bringing it down to R401.8bn.
“Some of that is due to government chipping in with support of R56bn but also due to the strengthening of the rand,” de Ruyter said.
“But also thanks to some very prudent costs-savings.”
The Covid-19 pandemic also impacted sales volumes, which were down 6.7%.
Revenue growth to R204.3 billion was helped by a 8.76% tariff increase.
Municipal debt remains a challenge, with arrear debt having increased 26% to R35.3 billion. De Ruyter said that since financial year-end, municipal debt has increased to R39 billion.
Giving an overview of the organisation’s performance, De Ruyter explained that Eskom’s long-term objectives of achieving operational and financial sustainability are dependent on the successful implementation of the turnaround plan currently under way.
“The turnaround plan, which is overseen by a diverse executive committee (Exco), comprising 56% Black female representation, focuses on operations recovery, improving the income statement, strengthening the balance sheet, driving business separation and bringing about a winning, can-do culture,” said De Ruyter.
Eskom announced that it is working towards achieving legal separation of the Transmission entity.
“A number of dependencies are lagging behind, putting the finalisation of separation of the Transmission entity by 31 December 2021 at significant risk,” Eskom said in a statement.
“However, our intention remains to comply with the timelines set out in the Department of Public Enterprises Roadmap, despite the obstacles encountered. The legal separation of the Generation and Distribution entities will be finalised within the 2022/2023 financial year.”
- Inside Politics
