Eskom facing R20bn financial loss next year

Entity to rely on government bailouts

Ramaphosa announced early in the year that Eskom would be split into three entities for generation, transmission and distribution

ESKOM’S financial crisis has deepened, with the power utility expected to post a loss of R20 billion next year.

This came after the company suffered another loss of R21bn this year following a serious cash crunch and ballooning debt.

Eskom bosses told MPs yesterday that it would be difficult to service the R440bn over the next decade, but the increase in losses would plunge the power utility into further financial crisis.

Jabu Mabuza, the chairperson of Eskom, and chief financial officer Calib Cassim said they would have to rely on the government bailout to stay in business.

Mabuza said the loss of R21bn this year was higher than in the previous financial year. “This year we had a loss of R21bn, which was 10 times the loss we reported in the previous financial year,” said Mabuza, adding that the loss then was R2.3bn.

Mabuza said they were projecting another loss of R20bn next year. However, measures were being put in place to address the liquidity challenges.

The government has given Eskom R59bn and the money will have to be approved by Parliament through the Special Appropriations Bill.

Finance Minister Tito Mboweni appointed former accountant-general, Freeman Nomvalo, as the chief restructuring officer to manage the financial situation at Eskom.

Mabuza said Mboweni would give more details in his Medium Term Budget Policy Statement later this month on the funding for Eskom.

“As we indicated earlier, these results are historic, we’re currently awaiting the interim results from March to September,” said Mabuza.

“We’re all waiting for the minister of finance. Most of it deals with the funding of the fiscus and state-owned entities.

“We need to respect and not preempt what the president will announce on the Eskom paper.”

President Cyril Ramaphosa later told his economic advisory council in Tuynhuys that the Eskom paper would detail the restructuring and funding of the power utility. He said Eskom was critical to the economy of the country.

ANC MPs told Mabuza in the meeting that they would not approve of any privatisation of Eskom.

Judith Tshabalala of the ANC said while they welcomed the unbundling of Eskom, they did not want any job losses.

Ramaphosa announced early in the year that Eskom would be split into three entities for generation, transmission and distribution.

Each entity would have its own chief executive and board of directors. However, Eskom Holdings would be the major business of the subsidiaries.

Mabuza also said they were worried about the escalation of the municipal debt to R20bn.

He said despite repeated efforts it had been difficult for them to recover the money. He said the top 10 defaulting municipalities had incurred 70% of the debt. The municipalities had defaulted despite the payment plans in place.