JSE bell tolls for beleaguered Eskom

DEBT BURDEN: UTILITY OWES BILLIONS OF RANDS

Eskom has until next week to publish its financial reports or else the Johannesburg Stock Exchange could suspend it.

JSE may suspend debt securities if utility fails to publish reports next Thursday.

Eskom has until Thursday next week to publish its financial reports or else the Johannesburg Stock Exchange could suspend the utility’s debt securities. Yesterday’s market notice from the JSE nudged Eskom closer to a worst-case scenario it’s been building on for years under Minister Lynne Browns’ stewardship – leaving it in a warped scenario where it has to borrow money for it to begin making money again.

“The aim of this notice is to advise market participants of the potential impact to the JSE Fixed Income Indices containing these debt securities,” the JSE stated.

In order to release its financial results, Eskom told Reuters it needed another R20 billion to assure auditors of its liquidity position – the difference between its sum of liquid assets and incoming cash flows on one side and outgoing cash flows resulting from commitments on the other side.

And with more than R350 billion in debt – almost a quarter of SA’s entire debt – and a reported warning from the Standard & Poor’s ratings agency, Eskom’s failure to service its debt was imminent. Eskom had a lot of work ahead of it, the appointment of a new board notwithstanding.

“Looking for another R20 billion; they don’t have too many friends out there,” said independent analyst Chris Gilmour. “The newly reconstituted board under Jabu Mabuza may well get some sort of sympathy from the likes of the National Energy Regulator of South Africa. It may be able to get that money but at the end of the day, government will have to bail it out in one way, shape or form.”

Finance Minister Malusi Gigaba said government didn’t have the funds to bail Eskom out. This was shortly before heading to the World Economic Forum in Davos, Switzerland, where the delegation hoped, among others, to “showcase SA’s attractiveness as an investment destination and trade partner”.

Gilmour noted that any loans granted would come at a cost.

“That cost will be an unequivocal commitment to changing the way Eskom does business. The whole thing has been an unmitigated disaster over the past few years,” he said. –