Eskom incurred a R20.5bn net loss for its 2020 financial year as the utility continued to grapple with significant financial and operational challenges.
“It’s fair to say the results are disappointing,” CEO Andre de Ruyter said at the release of the long-delayed 2020 annual results on Friday. “Our financial position remains challenging, largely as a result of our debt but also because of tariffs that are not cost reflective.”
The publication of Eskom’s annual results for the year-ended March 2020 on Friday come after a three month-delay, partly caused by the disruptive effect of the Covid-19 pandemic and nationwide lockdown.
Eskom generated R200bn in revenue, up from R180bn in 2019, while earnings were up from R31bn to R37bn and operations profit rose from R1.6bn to R9.2bn.
Still the utility recorded a loss of R20.5bn, which follows on from a similar R20.9bn loss for 2019.
It was Eskom’s unsustainable burden of R484bn and a net finance cost of R31.3bn that ultimately resulted in the annual loss, De Ruyter said.
Electricity sales were also 1.3% lower, and despite the utility achieving cost savings of R16.3bn, a large portion of this was absorbed by excess diesel consumption to run emergency turbines and avoid load-shedding.
“At the end of the day, the amount Eskom is generating from operations is not enough to cover its debt service costs,” said Eskom CFO Calib Cassim. To be sustainable, the utility’s debt burden must be tackled, he said, adding that that should be a primary focus for the current financial year.
Public enterprises minister Pravin Gordhan said it was clear Eskom could not rely on tariff increases to stabilise itself. “Something extraordinary needs to be done in restructuring the debt or managing the debt differently”.
Gordhan said some work had already been done on various debt options, which remain on table, and that further processes would be initiated imminently.
De Ruyter said it wasn’t all “doom and gloom” as the utility had made significant progress in dealing with the backlog in long-term maintenance of its power stations.
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