Eskom chairperson Jabu Mabuza says the struggling power utility is projected to make a R20bn full-year loss for the 2020 financial year.
The debt-laden parastatal reported a net loss after tax of R20.7bn for the 2019 financial year. It will announce its full-year results in July 2020.
Mabuza and the power utility’s senior management are presenting its interim results in Johannesburg.
The utility made a profit of R1.3bn in the first six months of the year. But Mabuza said this would change to a multi billion-rand loss in the second half of the financial year for a number of reasons.
There include the following:
- lower sales at lower prices during the summer months;
- the effects of unplanned breakdowns – which include the use of expensive diesel to fuel open cycle gas turbines;
- the fact that increased employee benefits are set to kick in during the second half of the year;
- higher costs of maintenance during the summer; and
- higher debt servicing costs due in the next six months.
Together, Mabuza said, these factors would “negate” what he called the “commendable performance” in the first six months of the year.
Mabuza on Thursday said that municipal debt had increased to R25.1bn, up from about R20bn at the end of the 2019 financial year. Payment for the provision of electricity by municipalities, excluding the country’s major metros, was only 78%, he said.
Calib Cassim, Eskom’s chief financial officer, meanwhile, said the utility’s sales volumes were 1.29% lower than in Sept 2018.
Mabuza said that, as part of its good governance clean-up effort, Eskom had introduced complete lifestyle audits of senior executive management.
Cases flagged as high risk were handed over to the Special Investigating Unit for further investigation. “I am aware that some of these cases have not moved to the NPA,” Mabuza said.
He said that the utility had finalised 245 investigations into fraud, corruption and other irregularities, with disciplinary action recommended for 122 of these cases.
Eskom is also working on recovering funds lost through irregularly awarded contracts, said Mabuza. This includes a high court ruling for Gupta-linked financial advisory firm Trillian to repay R600m. While Trillian has appealed the ruling, Mabuza said Eskom is confident of a favourable outcome.
The power utility earlier in the year also successfully recovered R1bn from McKinsey. Mabuza said Eskom had recovered R207m from Deloitte as well.
“We remain committed to recovering money from whoever unduly benefited. This includes staff (present or past), directors (present or past) and suppliers (present or past). We will not give in on this one.”
The chairperson said that Eskom’s coal stockpiles has improved from 36 days in March to 54 days by the end of September. Only one station’s coal stock remains below the minimum required, compared to nine understocked stations in March.
Mabuza noted that on Tuesday another unit at Medupi power station was brought into commercial operation. “The unit now forms part of Eskom’s generation output, contributing another 794 MW to the South African power grid,” he said. Medupi’s unit 3 went into commercial operation in July, also adding 794 MW of power to the grid. Kusile’s unit 3, meanwhile, was synchronised to the national power grid in April. Mabuza said that in the past six months 45km of high voltage transmission lines were also commissioned.
“These are significant achievements which talk to our commitment to expedite the completion of the long overdue new build programme and, in turn, alleviate pressure on supply.”
Article by FIN 24