Eskom in a ‘death spiral’ but somehow still on ‘right track’ – outgoing CEO

Outgoing Eskom group CEO Phakamani Hadebe has painted a grim picture of Eskom’s past, present and future following newly appointed acting CEO Jabu Mabuza’s announcement that the struggling energy utility incurred a whopping R20.7 billion net loss after tax for the financial year ended March 31.

In his last media briefing, Hadebe offered several excuses for Eskom’s precarious position, which Mabuza, who spoke before him, stressed should not be seen as a reflection on Hadebe’s tenure.

“The rate of increasing cost has always been ahead of revenue, which subsequently left a hole,” Hadebe said.

“The crux of the matter became clear that if government had to give us R100 billion, in a few years’ time we would be back to where we were.”

The outgoing CEO said Eskom was in “a death spiral because of the number of people moving away from the grid”.

Soweto, with debt which Hadebe said had increased from R15 billion to R18 billion, was also “presenting a problem”.

He added that 10 large companies owed Eskom an estimated R72 billion.

Despite this, Hadebe made the bold claim at the end of his briefing that Eskom was “on the right track”.

“We predict that operational challenges will take us another two years,” he said, suggesting that the company would be able to make a recovery after this.

READ MORE: Eskom reports R20.7bn loss for last financial year

Hadebe also pointed out progress the parastatal had allegedly made.

He said Eskom saved R9.9 billion after “invoking section 189” – retrenching members of the company’s top management.

However, this saving did not touch sides as it was “offset by various other issues,” he added.

Hadebe also mentioned Kusile Unit 2 and Medupi Unit 2, which had now been successfully synchronised, as a silver lining.

According to him, lifestyle audits were being conducted on the company’s executives and senior management.

“That is about to be completed. We have since identified high-risk cases and they have been forwarded to the [special investigations unit] for further investigations,” he said.

Hadebe’s assertion that Eskom would be back to square one within a few years no matter how many billions government threw at it would likely not offer any comfort to taxpayers.

Finance Minister Tito Mboweni last week announced a fast-tracked R59 billion bailout for Eskom to be paid in two instalments: R26 billion in the 2019/20 financial year followed by R33 billion in the 2020/21 financial year, adding to the billions the utility had and would continue to receive.

Hadebe said he believed Eskom’s mounting debt could be dealt with through somehow sorting out the discrepancy between its income and expenditure.

“The debt position in Eskom is that there is a need to optimise the whole balance sheet to deal with the issue,” he said.

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