ANA reports that rising municipal debt is no longer just an Eskom problem, according to the utility’s chief financial officer.
“Rising municipal debt coupled with Eskom’s poor financial and operational performance poses a systemic risk to the sustainability of the company,” the state-owned entity’s CFO, Calib Cassim, said this week.
He was speaking in Bloemfontein on Wednesday at the National Energy Regulator of SA’s (Nersa) public hearings for Eskom’s three-year tariff application.
He said the Eskom board had assessed the group’s ability to continue as a going concern and had considered a number of mitigating strategies and actions to address the risks identified.
“Eskom cannot solve the financial and operational sustainability challenges it faces alone.
“Eskom’s turnaround is a journey highly dependent on the active involvement of the shareholder, Nersa and other stakeholders including customers.”
Thys Moller, Eskom’s general manager of customer services, said municipal debt rose 80% over the past 18 months, reaching R17 billion by the end of September last year. Soweto’s debt, including interest charges, rose to R17 billion during the same period.
“Eskom continues to participate in the interministerial task team process with a view to finding lasting solutions with other stakeholders,” said Möller.
He added that Eskom had to date installed more than 80 000 split prepayment meters in Soweto and that it would continue to cut off defaulters.
Cassim said Eskom had made every effort to control its operating expenditure, but it needed more revenue from price increases and balance sheet support from the shareholder. The 15% tariff increase over three years it was applying for wouldn’t cover its debt commitments in full.
“The shortfall cannot be met by reducing costs alone and while some have pointed Eskom to the debt market, further debt adds to the problem. In the period 20072008 to 2017-18, Eskom’s debt has gone up ten-fold while prices have increased five-fold.”
The department of energy, via the electricity pricing policy, had indicated Eskom should have reached a tariff level of over R1/ kW/hr last year, he added.
The original of this report appeared on page 5 of The Citizen of 25 January 2019
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