Eskom has enough liquidity
Utility ‘is financially stable’
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.
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.”
Eskom chief executive Johnny Dladla while presenting the company’s latest financial results at the utility’s headquarters in Woodmead, north of Johannesburg, yesterday.