Eskom has enough liq­uid­ity

Util­ity ‘is fi­nan­cially sta­ble’

The Star Early Edition - - BUSINESS REPORT - Dineo Faku

EM­BAT­TLED power util­ity Eskom claimed that it was fi­nan­cially sta­ble, charg­ing that it had enough liq­uid­ity to fend for it­self and would not re­quire a cash in­jec­tion from the gov­ern­ment.

Eskom chief fi­nan­cial of­fi­cer Anoj Singh said the util­ity was not in any fi­nan­cial dif­fi­cul­ties as it had im­proved its fi­nan­cial po­si­tion with bet­ter liq­uid­ity lev­els and fund­ing dur­ing the year to March.

The claims come just days af­ter Fi­nance Min­is­ter Malusi Gi­gaba promised “soft sup­port” for Eskom while out­lin­ing his 14 point ac­tion plan for rad­i­cal eco­nomic growth last Thurs­day.

“We can as­sume that the soft sup­port re­lates to Eskom’s abil­ity to sign the In­de­pen­dent Power Pro­duc­ers Pro­gramme (IPP) agree­ments,” said Singh.

Gi­gaba said the sup­port would last un­til tar­iff ad­just­ments for 2018 came into ef­fect.

He told the me­dia that Eskom’s bal­ance sheet had weak­ened and an ur­gent plan was needed to help the com­pany ful­fil its man­date, adding that the plan would be sub­mit­ted to the Na­tional Trea­sury by the end of the month.

Gi­gaba also said that the En­ergy De­part­ment was ex­pected to un­veil a mech­a­nism to sup­port the util­ity un­til the next ap­pli­ca­tion for a tar­iff in­crease.

Singh said Eskom did not un­der­stand the rea­son­ing be­hind the Eskom plan.

“We have not made any for­mal re­quests for fi­nan­cial sup­port from the gov­ern­ment. We are await­ing the Trea­sury’s com­ment on the 14 point plan of ac­tion,” he said, adding that the util­ity had not met with Gi­gaba since.

Eskom has been re­luc­tant to sign power sup­ply agree­ments with 37 IPPs, how­ever Pres­i­dent Ja­cob Zuma said ear­lier this year that the Eskom would sign the out­stand­ing power pur­chase agree­ments for re­new­able en­ergy in line with the pro­cured round.

“It is com­mon cause that we are in a net bor­row­ing en­vi­ron­ment,” Singh said. “We have ac­cess to the debt cap­i­tal mar­ket.”

Eskom re­ported that its net cash in­flow from oper­at­ing ac­tiv­i­ties rose to R45.8 bil­lion for the year com­pared to R37.2bn in 2016.

The util­ity said its liq­uid­ity po­si­tion, com­pris­ing cash and cash equiv­a­lents plus in­vest­ment in se­cu­ri­ties, was R32.5bn at March 31, 2017.

It said it made cost sav­ing of R20.2bn in the year un­der re­view.

Singh said the sound and sta­ble fi­nan­cial po­si­tion and the fact that Eskom had met its tar­gets jus­ti­fied its de­ci­sion to pay its ex­ec­u­tives bonuses, ar­gu­ing that Eskom had man­aged to se­cure 77 per­cent of its fund­ing re­quire­ments, in­clud­ing cash on hand, for the cur­rent 201718 fi­nan­cial year, de­spite tough mar­ket con­di­tions.

He said in­ter­na­tional sales vol­umes in­creased 12.1 per­cent as re­sult of sur­plus ca­pac­ity.

Am­bi­tion

In­terim group chief ex­ec­u­tive Johnny Dladla told jour­nal­ists that Eskom was al­ready work­ing on a plan to re­duce gov­ern­ment reliance in the next two years.

“Our am­bi­tion is to re­lease about R105bn in gov­ern­ment guar­an­tees. That will en­sure that we fo­cus on the sus­tain­abil­ity of this or­gan­i­sa­tion,” adding that cur­rently the com­pany’s loans were guar­an­teed by the gov­ern­ment and the com­pany planned to ac­cess more un­se­cured loans in­stead.

Pub­lic En­ter­prise Min­is­ter Lynne Brown said that Eskom was in a bet­ter fi­nan­cial po­si­tion than it was a year or two years ago.

“I have asked Eskom’s new lead­er­ship to roll up its col­lec­tive sleeves and im­me­di­ately ad­dress three op­er­a­tional mat­ters: con­tract man­age­ment, sup­ply chain man­age­ment, con­flicts of in­ter­est & other mat­ters that would im­prove the rep­u­ta­tion of the com­pany.”

PHOTO: SIMPHIWE MBOKAZI

Eskom chief ex­ec­u­tive Johnny Dladla while pre­sent­ing the com­pany’s lat­est fi­nan­cial re­sults at the util­ity’s head­quar­ters in Wood­mead, north of Jo­han­nes­burg, yes­ter­day.

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