As Eskom buck­les, guess who will pay up? You

CityPress - - Business - MOYAGABO MAAKE moyagabo.maake@city­

Eskom is no closer to re­solv­ing its cash crunch, and its rev­enue short­fall “re­quires sig­nif­i­cant shifts in the busi­ness”, it in­di­cated in a state­ment on Fri­day.

The power util­ity said it had se­cured 90.5% of R300 bil­lion in fund­ing for its cap­i­tal ex­pan­sion pro­gramme, but it was hob­bled by the Na­tional En­ergy Reg­u­la­tor’s (Nersa’s) de­ci­sion to al­low it only to re­cover costs for the three years to 2013, ig­nor­ing the ad­di­tional three years Eskom asked for.

“The rev­enue short­fall ... re­quires sig­nif­i­cant shifts in the busi­ness,” said fi­nance direc­tor Tsholofelo Molefe, adding that Eskom was pur­su­ing a num­ber of op­tions with gov­ern­ment to plug the gap.

In June, credit rat­ings agency Stan­dard & Poor’s (S&P) down­graded the util­ity’s credit rat­ing, plac­ing it a rung above junk sta­tus, and putting it on credit watch, which means it had a 50% chance of be­ing down­graded within 90 days.

Eskom said all of its rat­ings re­mained “at the low­est end of in­vest­ment grade”.

“Eskom’s fi­nan­cial sus­tain­abil­ity is un­der pres­sure, but we have in­ves­ti­gated al­ter­na­tive fund­ing, in­clud­ing pos­si­ble eq­uity and quasi-eq­uity in re­sponse,” said Molefe. “We have ap­plied to Nersa for the [reg­u­la­tory clear­ing ac­count] ad­just­ment, and we have launched a busi­ness pro­duc­tiv­ity pro­gramme to re­duce costs, in­crease pro­duc­tiv­ity and en­hance ef­fi­cien­cies.”

Eskom’s rev­enue and ex­pen­di­ture is largely based on fore­casts, so the reg­u­la­tory clear­ing ac­count is used to re­cover dif­fer­ences in fore­cast and ac­tual rev­enue/ex­pen­di­ture.

But there ap­pears to be some con­fu­sion about the ex­tent of Eskom’s short­fall. Eskom be­lieves it has a R28.5 bil­lion short­fall. S&P, when plac­ing Eskom on credit watch in June, put the short­fall at R50 bil­lion. On Wed­nes­day, at a press briefing an­nounc­ing the ap­point­ment of Tshediso Ma­tona as Eskom’s new CEO, Public En­ter­prises Min­is­ter Lynne Brown said Eskom needed R219 bil­lion.

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