On Monday 9 July, Eskom’s auditors flagged another significant discrepancy through irregular expenditure in its operations and issued a warning to bondholders via the JSE SENS system. Such a warning is of sizeable consequence and material interest to the bondholders.


“Looking back at the Eskom results released in 2017,” Ted Blom, a partner at Mining & Energy Advisors says, “it appears more probable than not this disclosure will revolve around unauthorised derivative gambling via its treasury division.”

Eskom has been exposed to derivatives of one sort or another since it entered into a 25-year highly discounted electricity supply contract for aluminium smelter industries. Over the years, Blom has questioned Eskom’s method of accounting for only the current portion of its extensive exposure which amounts to nearly R100bn over the life of these contracts.

Documents released during Eskom’s 2017 results presentation mentioned an R30bn potential exposure which was glossed over by the then Finance Director Anoj Singh as, according to him, they had not matured. Had Eskom provided for this exposure, the results would have been materially worse than presented.

Blom had previously warned that “the chickens had not yet come home to roost at Eskom”, despite denials by the new management team that Eskom was still hiding festering boils. Blom claimed to have a list of these “boils” which he presented to Parliament in 2017. Further enquiries by Blom, including an R4bn Gupta-linked Eskom derivative commission, have been left unanswered by Eskom.

“Boils need to be lanced” says Blom, “but Eskom’s old and new management have been applying plasters for the past 12 months. Left untreated, they will ultimately erupt” says Blom.

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