Close

Eskom-power-lines-picNewly appointed Eskom interim Group Chief Executive (GCE) Phakamani Hadebe is confident that the utility can turn the corner despite current challenges.

Briefing reporters at the interim results announcement on Tuesday, Hadebe said while challenges included a qualified audit report, declining sales volumes and increases in municipal arrears the utility could still find its way.

“I am confident that Eskom can turn the corner. The challenges at Eskom are less about core operational issues,” he said.

Eskom has seen a 33% spike in municipal arrears, rising from R9 billion to R12 billion and according to Hadebe the qualified audit could have been avoided, however corporate governance issues at the utility have led to liquidity issues.

Since assuming the role of GCE following government’s announcement of a new board earlier this month, Hadebe said funders requested that the entity addresses corruption. This, he said, has hindered the utility and investors’ discussion of the utility’s funding mix.

Hadebe bemoaned leadership issues at the utility, saying that leadership was not only about the appointment of the board, but more about the ability of the leadership of the institution to create an enabling environment.

Financial results

The financial performance of Eskom showed that external auditors issued an unqualified review conclusion, with an emphasis of matter regarding Eskom’s going concern position.

Meanwhile, the utility reported EBITDA ((earnings before interest, tax, depreciation and amortization) of R30 billion (Sept 2016: R32 billion), due to the 2.2% tariff. Eskom’s net profit after tax came to R6 billion (Sept 2016: R10 billion), with higher depreciation and net finance cost due to new build units coming online.

However, generation plant performance improved, with plant availability at 83.2% (Sept 2016: 78.4%). Eskom had targeted 80% by 2020.

Board chairperson Jabu Mabuza said tariffs cannot be the panacea to Eskom’s challenges.

“Our role as board and management is to identify where problems are and how to solve them,” he said.

Additional Reading?

Request Free Copy