Eskom admits financial position is not stable

Eskom has refused to say how much it has in liquid assets‚ but said its financial position was not where it should be or could be.

“What I can confirm is that our position is not where it should be or could be. Our revenue is low because of low electricity demand caused by low economic growth‚” Eskom spokesman Khulu Phasiwe said on Monday.

A report by EE Publishers on Monday stated that a report from Eskom to its shareholders for the second quarter ending on September 30 painted a picture of funding difficulties.

The report said‚ without further funding‚ Eskom would only have R1.2bn in liquid assets at the end of November and would move into negative liquidity of about R5bn by the end of January.

Phasiwe said Eskom would release its interim results before the end of the month‚ where the true financial situation of the power utility would be revealed.

Phasiwe said Eskom’s sales growth had been declining for a number of years.

He said operating costs remained very high in relation to purchasing electricity from independent power producers.

“We spent R21-billion buying electricity from independent power producers last year. This is up from R15-billion the year before. However our own costs of producing energy from coal and diesel are going down.”

Phasiwe said Eskom had not been folding its arms.

“We are targeting municipalities which owe us. Currently municipalities owe Eskom R11.2bn in arrears debt. We have sent letters to owing municipalities to pay us.”

Eskom was also trying to recoup money through the Regulatory Clearing Account (RCA).

The RCA is a monitoring and tracking mechanism that compares certain uncontrollable costs and revenues assumed in the multi-year price determination made by the energy regulator to actual costs and revenue incurred by Eskom.

Phasiwe said it had identified R54-billion that could be recouped through the RCA process.

Eskom would also attempt to speak to the Chamber of Mines and business to increase electricity usage.

Eskom was also asking the National Energy Regulator of South Africa for a tariff increase of 19.9%‚ up from the current 2.2% increase granted by the regulator‚ Phasiwe said.

“A tariff increase is not the only factor that will get is out of this situation. We need to improve our efficiencies. Where we are able to cut costs‚ we will be able to do so. But we are not looking at retrenchments as a cost-cutting measure.”

Phasiwe also denied the report by EE Publishers that Eskom was in discussions with banks to provide short-term capital expenditure of R5-billion to 10-billion until funding issues were resolved.

“Our fundraising efforts had been ongoing as we are trying to raise R337-billion for new build programmes. These efforts are not directly linked to this issue‚” he said.