We're broke but we can fix it‚ says Eskom
Electricity provider Eskom is in a precarious financial position and is desperately trying to avoid a liquidity crunch that may render it unable to pay both staff salaries and suppliers by January.
The utility confirmed on Monday that it had 20 times less cash than it needs to continue funding operations.
Eskom has informed public enterprises minister Lynne Brown‚ asking for her intervention to fast track access to cash from previously agreed funding facilities. Without immediate access to cash‚ Eskom will become insolvent by December.
“It’s part of our normal reporting processes to inform the minister whenever we have a major reportable issue‚” said spokesman Khulu Phasiwe.
“Our target is a buffer of about R20bn working capital‚ and that has not been met. We have in the bank slightly more than R1.2bn.”
On Monday news organisations Fin24 and EE Publishers revealed the existence of an internal report that painted the gloomy picture. To keep Eskom running‚ the power utility requires at the very least R8bn cash every month‚ according to the report. Phasiwe said the utility is “not where we should be as a company‚ which is still worrying.” He said the utility was having problems accessing previously agreed loan facilities due to the ongoing allegations about massive corruption and lack of good corporate governance.
“Our funders have asked us to sort out our corporate governance‚ and that has made it difficult to access funding.”
In a statement released on Monday night‚ Eskom interim group chief executive Sean Maritz said: “We remain resolute that we will fully execute the required funding for the year‚ albeit under challenging conditions. Our liquidity levels are not at the desired levels; however‚ they are sufficient to fulfill our commitments.”
Maritz said Eskom had achieved 56% of its funding target so far.
TimesLIVE can also reveal that the race to stave off insolvency began in earnest in July‚ with Eskom holding meetings with its shareholder minister and the national treasury.
On July 26‚ Eskom chairman Zethembe Khoza met with finance minister Malusi Gigaba and Brown and requested they expedite Eskom’s access to cash and help find solutions to the looming liquidity crisis. This was 10 days after publicly denying there was any risk to working capital.
In a letter dated August 28‚ Khoza again wrote to both ministers: “The purpose of this letter is to highlight the liquidity risks at Eskom and the mitigating actions in place to address these concerns.”
Khoza said the risks faced by the utility were “compounded by the longer term risk given the uncertainty of the outcome of the 2018/19 tariff application currently before (energy regulator) Nersa.”
Eskom has requested an increase in electricity prices of 19.9% through the revenue clearing account mechanism. It aims to raise at least R63bn in revenue through the short-term tariff increase.
Spokesman for Brown‚ Colin Cruywagen‚ refused to be drawn into detailed questions on the matter on Monday‚ referring questions to Eskom‚ while treasury had not responded at the time of publication.