Pretoria- Poor plant performance and high debt levels continue to be a concern at Eskom as municipalities are owing over R44 billion
The embattled power utility admitted that it has challenges during a release of its annual results on Friday.
The utility said it received R31.7 billion equity support from government this year alone. While this government support, and the cost containment measures helped improve liquidity, Eskom’s liquidity remains constrained because of unsustainably high debt servicing costs.
“Cash from operations remained insufficient to meet debt servicing and some capital investment requirements,” said Calib Cassim, Eskom’s chief financial officer.
Cassim said municipal and residential area debt remained a challenge, with debt by municipalities escalating by R9.5 billion year-on-year, reaching a high of R44.8 billion in March 2022.
“Eskom’s capital and tariff structure need to be permanently resolved to ensure long-term financial sustainability. In addition, the overdue debt by municipalities must be resolved.
“Eskom waits in anticipation the Nersa price decision on 12 January, 2023 and the government’s debt relief solution to be announced in February next year,” said Cassim.
Outgoing Eskom group chief executive, André de Ruyter, said 2022 was a tremendously difficult year for Eskom.
“Not all our priorities as outlined in the Eskom Turnaround Plan could be achieved, particularly improving the reliability and predictability of the generation fleet following years of inadequate maintenance coupled with the current and increasing shortage of generation capacity of between 4 000MW and 6 000MW in the country.
“In spite of the marked improvement in the financial performance, good progress on the new build programme, the disappointing performance on the generation front is an indication that there is still a long way to go before Eskom can achieve long-term sustainability,” said De Ruyter.
Cassim further added that a net loss after tax of around R20 billion is expected for the financial year ending 31 March, 2023.
“This is mainly attributable to Open Cycle Gas Turbines (OCGT) spend exceeding the Nersa allowance, growth in municipal arrears and a shortfall in recovering debt service costs in the electricity tariffs.”
Despite the challenges, Eskom said there’s improvement in financial performance.
On the operational front, headcount was reduced to 40 421 employees, from 42 749 in 2021.
IOL