Eskom reports R12.3-billion loss
Eskom has announced that it has incurred a R12.3 billion loss for the year ending 31 March 2022.
This is an improvement on 2021’s R25 billion loss caused by Eskom’s significant debt problem — which saw the power provider spend approximately R38.9 billion on repaying capital, and R32.5 billion in interest.
“The debt burden still continues to play a significant role in the finances of Eskom,” said Eskom CEO André de Ruyter.
“If a solution to this debt is not found, we will rely on ever-larger support from national treasury to service debt and non-payment from municipalities.”
De Ruyter then highlighted the significance of municipal non-payments to Eskom’s financial challenges.
“This area is of grave concern to Eskom and its board,” said De Ruyter.
“We are aware that we are under legal obligation to keep supplying municipalities who do not pay us, as confirmed by the recent verdict in the constitutional court.”
“While we will respect the court judgement and abide by it, this begs the question of who will service the debt.”
Eskom spokesperson Sikonathi Mantshantsha added that the state-owned power utility is “exploring measures” to safeguard its interests.
While Eskom reported a net loss after tax, it saw a significant operating profit of R20.4 billion — up from R6 billion in 2021.
This was partially driven by increased sales volumes of 198,281GWh, mainly thanks to many sectors recovering following the Covid-19 pandemic and lockdown.
Eskom’s EBITDA was also up from R32.6 billion in 2021 to R52.4 billion this year.
“Financial indicators have improved significantly despite navigating a very challenging operating environment,” said Eskom chief financial officer Calib Cassim.
Calib Cassim, Eskom chief financial officer
A weak future
Eskom does not envision its upward trends continuing in 2023, however.
It forecasts a net loss of R20.1 billion — a 63% increase.
Eskom believes its losses will increase because of a decline in sales volumes, increased maintenance spending, and higher spending on OCGTs and fuel oil due to continued low EAF and capacity constraints.
Energy availability factor (EAF) measures how many generating units at Eskom’s power plants are available at any given time.
Its average EAF has declined significantly, as shown in the following chart from EE Business Intelligence.
“Eskom’s week-on-week energy availability factor (EAF) for week 50, 2022, hits a new record low of 50.73%. This after a record low of 51.55% for week 49, 2022,” EE Business Intelligence head Chris Yelland said this week.
Open-cycle gas turbines (OCGTs) are Eskom’s rapid-response emergency diesel-powered plants. Its two main facilities — Ankerlig and Gourikwa — generate enough electricity to mitigate around two stages of load-shedding.
However, they are also an essential resource for rapidly dispatching capacity and stabilising the power grid if several generating units at its coal-fired power stations break down.
Eskom has relied heavily on its OCGTs this year and announced in November that it had run out of money to buy diesel.
Minister Pravin Gordhan’s Department of Public Enterprises stepped in and reportedly brokered a deal with PetroSA for additional diesel.
However, Eskom has been using the fuel sparingly in recent weeks, resulting in South Africa experiencing extended stage 5 and stage 6 load-shedding.
De Ruyter also acknowledged that its timeline for the legal separation of Eskom’s transmission, distribution, and generation units had been delayed.
Army and Hawks deployed at Eskom power stations
De Ruyter said Eskom welcomes the deployment of the Hawks and the SANDF to secure Eskom assets.
However, he was critical of how long it had taken for this to become a reality.
“My only regret is that it has taken so long for these agencies to engage with a matter of national security,” said De Ruyter.
“It’s a grave pity where we had to get to such a situation where Eskom itself with privately funded intelligence gathering to convince these law enforcement agencies to assist.”
He said that he hopes this will be a turning point and that these organisations will treat Eskom’s challenges with urgency.
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