Eskom: We’re on sound financial footing

Eskom said on Wednesday that it was on a “firm operational and financial footing” as it reported an eight percent increase in revenue to R177 billion, up from R164.2 billion, for the 2016/17 financial year ended 31 March.

Eskom’s interim group chief executive, Johnny Dladla, said the focus of the power utility had now shifted to managing surplus capacity, whereas the security of power supply was the key concern nearly two years ago.

Dladla said Eskom had adopted an aggressive sales volume growth to support economic growth by encouraging an annual growth of 2.1 percent in local demand and eight percent in export sales over the next five years in a bid to manage the surplus capacity.

“Eskom is ideally positioned to support the economic recovery of South Africa and enable industrial growth across Southern Africa,” Dladla said.

Dladla said Eskom’s turnaround plan was premised on three key focal areas, which are improving generation performance; ensuring financial sustainability; and completing the new build programme.

Eskom’s earnings – before interest, taxes, depreciation and amortisation (EBITDA), a measure of a company’s operating performance – increased 14.4% to R37.5 billion in the year-ended, up from R32.8 billion in same period last year.

Revenue was driven largely by a 12.1% increase in export sales and a 9.4% tariff increase that was granted by the energy regular last year.

Eskom chief financial officer, Anoj Singh, said Eskom has concluded new export sale agreements with a number of regional trading partners, ranging from 50MW to 200MW in order to grow export sales.

Singh said the company’s cost-cutting measures were also bearing fruit with a saving of R20.2 billion realised in the year under review, up from R17 billion achieved previously.

“We will continue to engage with government, collaborating closely with the Department of Energy and [National Energy Regulator of South Africa] to manage [Independent Power Producers] programme risks and mitigate any unintended negative operational and financial impacts on Eskom,” Singh said.

The group’s liquidity position, comprising cash and cash equivalents plus investment in securities, was R32.5 billion at 31 March 2017.

Singh said Eskom has managed to secure 77% of its funding requirements, including cash on hand, for the current 2017/18 financial year despite tough market conditions.

Meanwhile, Eskom’s interim chairperson, Zethembe Khoza, said he was greatly concerned about reportable irregularities that were raised by Eskom’s external auditors.

“It is worth noting that the board has taken adequate steps to the satisfaction of the auditors that the irregularities have been mitigated to an acceptable level,” Khoza said.

“Management has shared plans to facilitate improvements in relation to the qualified audit.”

Khoza added that Eskom would be taking disciplinary action against suspended chief executive, Matshela Koko, after the completion into his conflict of interest investigation.