Johnathan Paoli
Electricity Minister Kgosientsho Ramokgopa has said that the ongoing failure of municipalities to settle their accounts with Eskom remains one of the biggest obstacles in the power utility’s return to effective functioning.
Ramokgopa was speaking at the weekly briefing on the implementation of the energy action plan on Monday morning, and he said the municipal debt is currently standing at R64 billion.
“This is undermining the liquidity of Eskom because Eskom has to recover the cost associated with generation and the reticulation and distribution of electricity,” Ramokgopa said.
The minister said he remained skeptical of the ability of municipalities to meet the requirements that the Treasury listed in order to have a portion of their debt written off.
Ramokgopa stressed the reality of the exponential growth of this debt and the influence this will hold over the utility’s recovery.
This follows the announcement by Eskom last week that Tshwane and Ekurhuleni owed a combined amount of R4.7 billion.
Eskom’s interim financial results revealed a 64% drop in profits for the six months ending 30 September 2023. Despite an increase in revenue, reaching R144.84 billion, up from R135.4 billion the previous year, the utility’s earnings before interest, taxation, depreciation, and amortisation (EBITDA) dropped to R37.96 billion, down from R44.56 billion the previous year.
The power utility’s generation segment has been the primary source of its financial struggles, with losses extending from R2.2 billion in 2021 to a massive R5.2 billion this year.
Eskom’s debt liabilities currently stand at R423.64 billion with a projected net loss before tax for 2023, estimated to be R32.4 billion.
Despite these challenges, the national government has provided continued equity support, with R21.9 billion committed and received in January, and is receiving assistance through a debt-takeover from the National Treasury, which is currently undergoing the legislative process.
The minister concluded by saying that Eskom’s failure to upgrade its infrastructure was partially caused by the poor revenue collection.
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