Eskom records R19bn net loss amid mounting ‘unsustainable debt’

The power utility’s CEO André de Ruyter released the annual results on Tuesday afternoon at its Megawatt Park headquarters.

De Ruyter admitted Eskom was still faced with challenges but seemed optimistic after the utility reduced its gross debt by R81.9 billion.

This is a 16.9% decrease to an outstanding debt of R401.8 billion. 

“The slowdown of economic activity due to the pandemic led to an unprecedented decline in sales, which fell 6.7% from the previous year,” he said. 

“Sadly, the losses Eskom suffered as a result of the COVID-19 pandemic were not limited to our finances. 

“Operationally, however, every crisis does bring with it an opportunity. In this case, Eskom used unfortunate lower demand presented by the lockdown to conduct much-needed maintenance at some of our power stations.”

According to De Ruyter, municipal debt continues to cripple the power utility with an increase 26% to outstanding municipal debt rose 26%.

He assured Eskom is pursuing active partnership agreements with some of the municipalities to arrest the spiral in outstanding debt.

“Cost savings alone is not a solution. Eskom’s capital position must be resolved. Cost-reflective tariffs and resolving the municipal arrear debt are required to achieve the successful implementation of Eskom’s turnaround and to ensure long-term financial sustainability.”

Meanwhile, revenue increased to R204.3 billion during the year, from R199.5 billion the previous year. 

“This is mainly attributed to an 8.76% annual increase in the electricity tariff during the period, offset by a reduction of 6.7% in sales volume.” 

De Ruyter added Eskom achieved operational cost savings of R14.4 billion during the year under review, against a target of R14.1 billion.