State owned power utility Eskom is confident that it will survive a looming cash crunch if a new board is appointed and corporate governance issues are resolved.
On Monday it emerged that Eskom will at the end of November have just R1.2-billion in cash and effectively run into a deficit of R5-billion by the end of January next year.
The figures were contained in a report Eskom sent to Public Enterprises Minister Lynne Brown on the interim financial results ending September 30.
In a statement issued late on Monday‚ Eskom also cited the appointment of a permanent group chief executive and chief financial officer as well as solutions to issues that led to its qualified audit opinion and R3.6-billion in irregular expenditure for the 2015/2016 financial year as key issues that needed to be resolved for a financial turnaround.
“Eskom has always maintained that the 2.2% tariff increase for FY17/18 will present challenges to the company’s liquidity position for the current financial year. As a result‚ Eskom has had to undertake certain financial commitments to ensure sufficient liquidity in line with its funding requirements‚” the statement read.
Since the 2012/2013 financial year‚ cost cutting measures have saved Eskom R47-billion‚ but the debt book still remains at around R470-billion.
Eskom said it has secured approximately 56% of the funding requirements for the current financial year but the execution of the remaining funding requirement is largely dependent on Eskom being able to address the following:
– The constitution of a new board of directors
– Resolving internal governance related matters
– The appointment of a permanent Group Chief Executive and Chief Financial Officer and other executive positions and‚
– Remedying the issues that gave rise to the qualified audit opinion.
Five senior executives at Eskom have been suspended following allegations of their involvement in state capture‚ particularly R1.6-billion in payments to global consultancy McKinsey and Gupta-linked financial advisory firm Trillian which‚ it has emerged‚ was paid without legal contracts being in place.
“Eskom is confident that the board of directors and the executive management team with the support of the South African government will address the above-mentioned issues that have negatively impacted its liquidity. As such Eskom will maintain sufficient liquidity to support its operational and financial requirements‚” the statement continues.
“We remain resolute that we will fully execute the required funding for the year‚ albeit under challenging conditions. Our liquidity levels are not at the desired levels; however‚ they are sufficient to fulfil our commitments‚” Eskom’s interim group chief executive Sean Maritz said.
Source: TMG Digital.