Time for excuses at Eskom is over
Acting Eskom CEO Calib Cassim has said that he expects the power utility’s financial results to significantly improve from next year.
“The time for excuses for Eskom and its staff is over. We now need to deliver for the organisation and the country,” Cassim said during the state-owned company’s annual financial results presentation.
Eskom posted an annual net loss of R23.9 billion, and Cassim said they projected a marginal improvement to R23.2 billion by March 2024.
However, the South African taxpayer will soon begin taking over more than half of Eskom’s debt through a R254-billion government debt-relief programme.
“March 2024 should be the last year we have these significant losses as we see the benefits from the debt relief,” Cassim stated.
“The financials will improve significantly by March 2025.”
In his outlook for the 2023/24 financial year, Cassim said that although Eskom received an 18.65% increase for 2024, sales volumes are expected to decline by 2% to 185.3TWh.
He explained that the poor performance of Eskom’s power plants will likely continue to constrain its financial performance.
Delays in Independent Power Producer Procurement Programmes (IPPPPs), including the Risk Mitigation IPPPP, has led to reliance on expensive diesel-burning open-cycle gas turbines to augment Eskom’s generating capacity.
“Spend on Eskom IPP OCGTs to be managed within budgeted levels of R28.5 billion,” Cassim stated in his presentation.
“Savings on other IPP programmes will be reallocated to the OCGTs if needed.”
Higher OCGT production could be allowed due to favourable diesel prices.
Cassim also said that one of Eskom’s biggest financial challenges remains that electricity prices in South Africa are too low.
Tariffs do not reflect the actual costs of producing and delivering electricity to homes and businesses.
Other challenges include excessive OCGT usage due to capacity shortages, inflationary cost increases, non-payment from customers (especially municipalities), and Eskom’s debt burden.
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