Eskom has posted a net profit after tax of R 83 million in the interim financial period to end off September, a period characterised lower demand for electricity due to the effects of the Covid-19 lockdown on economic activity.
In a statement released on Monday, the power utility described the past six-month’s operating environment as “very challenging”, and the net profit is a boost from a R 1.9 billion loss seen during the corresponding period in September 2019.
Revenue grew slightly to R 108.7 billion, froom R 107.5 billion, while the company’s cash balanced slowed to R 11.8 billion. The state owned power generator which is working to restore its weak balance sheet and high debit ratio says it expects electricity production for the full-year to be 14.4TWh, or 6,1% lower than the previous year.
“Due to the return to operation of many sectors of the economy, the projected impact on sales in the second half of the year is less severe in relative terms than that experienced in the first half”, the company said.
Eskom’s cash balance declined to R 11.8 billion over the last six months, from R 7.8 billion in 2019. The net cash flows from operating activities of R 18.9 billion were insufficient to service debt and interest repayments of R 23.7 billion and R 19.1 billion, in what prompted the company to seek government support in order to address its dire liquidity challenges.
Eskom’s outstanding debt as at 30 September 2020 stood at R 463.7 billion, up from R 454.2 billion in September 2019.
While financial problems continue to batter the power generator, its leaders have blamed some of its challenges on a myriad of issues, from escalating arrear debt from non-paying customers. above-inflationary increases in operating costs, to the decision by the National Energy Regulator of South Africa (Nersa), which they blame for failing to grant it cost-effective tariffs.
The amounts in dispute through the review applications tops R 110 billion, including the R 69 billion equity injection incorrectly deducted from the determination for the fourth multi-year price determination (MYPD 4). This corresponds to a price increase of approximately 55%, if effected once-off in the 2022 financial year, according to Eskom.
“It is widely accepted that the price of electricity in South Africa must migrate towards a cost-reflective tariff that covers prudent and efficient costs to ensure the long-term sustainability of the electricity supply industry,”, the company said.
The decision for the 2019 tariff increases led to a shortfall of R 14 billion, against an application of R 27.3 billion.
The recovery of funds believed to be illegally siphoned from the company is being pursued through legal channels. In August 2020, summon to recover approximately R 3.8 billion prepayment to Gupta-linked Tegeta Exploration and Resources, were issued against former executives and directors, including former board members Ben Ngubane, ex CEO Brian Molefe, Anoj Singh, Matshela Koko and Suzanne Daniels, among others.
Other defendants in the case include formers minister of mineral resources Mosebenzi Zwane, businessman Salim Essa, and Ajay, Atul and Tony Gupta.