Eskom bends under its debt burden of R419 billion and appears to be fishing for another government holding.
This became clear in presenting its interim results for the six months ending September 30 at its Megawatt Park headquarters in Sandton on Wednesday.
The debt could increase to R600 billion over the next three years. Eskom has already used R337 billion of R350 billion government warranty and could request further securities.
The utilities identified a 89% net profit reduction – from R6.3 billion at the end of September 2017 to R671 million only one year later. Eskom CFO, Calib Cassim, newly appointed by Calib Cassim told reporters that the whole year loss could be as much as R15.2 billion, of the R11.2 billion budgeted at the beginning of the financial year .
& # 39; Expect load loads;
These results come against a declining operational performance background. Eskom COO Jan Oberholzer said at the event "load loads are a reality going on".
During the reporting period, Eskom produced R26.6 billion operational activities, which was R18.5 billion short of the R45.2 billion he had to serve his debt. This has almost double the R23.2 billion debt servicing costs at the end of September last year.
Staff costs and basic energy costs increased by 12% while debris debt from boroughs increased by 25% to R17 billion.
Sales decreased by 0.8% which caused only 2.7% to increase revenue despite a 5% tariff increase.
Eskom, Jabu Mabuza, explained that "Eskom is not sustainable as it has been blamed and seen today."
Permanent permanent situation
Eskom said it was locked into a permanent loss situation and revenues have been structurally restricted. Expenses have been beaten due to inefficiency, and electricity tariffs are not cost-reflective.
The problem is that customers can not pay tariffs that reflect costs, he says.
He added, without significant changes, that funding costs will increase further and the utilities may not be able to continue as a business that goes on.
Eskom does not sell enough electricity and does not collect the revenue for the electricity that has to be sold, says Mabuza. It's only spending more and more to make the payments on the money it has lent.
The board has prepared an "ambitious" turning plan and is currently engaged with government. He has met with ministers of Pravin Gordhan with public enterprises and has instructed President Cyril Ramaphosa. He still meets energy ministers and finance and will also engage with trade unions, says Mabuza.
It will take pain;
He stressed that Eskom could not be solved by Eskom alone, saying that utility "will have to work with the government to reduce the costs of debt and debt Eskom".
"It will take pain," he said. "The question is what kind of pain."
It was asked if the conversion of debt to equity is an option, Mabuza said that the Eskom board thought in the first instance that it could work, but realizing that its largest creditor – the Public Investment Corporation (HPP) – needs to return equity to government pensioners .
"He can not invest in a loss-making entity," he said; If the PIC does not invest, why would other funders be?
"There are other ways, such as relief or equity injection," he added.
Incredible for investors
Mabuza further stated that "assets can be sold" in terms of assets and that all power stations other than Medupi and Kusile operate at an average 21% Ebitda edge (pre-interest, tax, depreciation and amortization gains); It would not be attractive to investors.
Medupi and Kusile operate on Ebitda of around 60% and are sellable, but Eskom is required to generate electricity. In addition, Eskom pays more than double the amount that should be for the construction of the two power stations, so this idea is "not starting", says Mabuza.
The sales of Eskom Finance Company have been on the cards for a long time, but that will not make a significant difference to the Eskom situation, he said.
Eskom's problem is the size of his debt and service, says Mabuza, adding "if we can get some relief on the load" the service would become a lesser problem.
Someone must pay …
He emphasized that "someone" must pay the debt: "Either the user or taxpayer must pay. And this is the same person!"
Asks the minimum need to reduce Eskom's debt burden, Eskom CEO Phakamani Hadebe said that he will rely on the tariff decision at the moment before the Nersa energy regulator. Eskom has asked for a tariff increase of 15% per annum for the next three years.
Nersa will be holding public hearings about the application in January and announces its decision on March 1st next year.
* In the same event, Eskom said that Calib Cassim, who has been operating as a CFO for the past 14 months, has permanently appointed his post.
Listen: Eskom woes deepens despite the turning plan