Energy utility Eskom mentioned Tuesday (31 August) that the Covid-19 pandemic negatively impacted its monetary efficiency for the interval ended March 2021, with sales volumes down 6.7%.
It diminished its gross debt by R81.9 billion – a 16.9% discount – to an impressive debt of R401.8 billion.
The organisation’s debt remained unsustainable, attracting a web finance value of R31.5 billion, turning an working revenue of R5.8 billion into a loss of R18.9 billion after tax.
The group mentioned it achieved operational value financial savings of R14.4 billion through the yr below assessment, towards a goal of R14.1 billion. Though sales volumes had been down, main power prices elevated 3.4% to R115.9 billion. Normalised working prices elevated 1.6%.
The group has additionally continued to undergo the consequences of load shedding in 2021.
Identical to the overwhelming majority of South African companies, Eskom was not spared the worst results of the Covid-19 pandemic, mentioned André de Ruyter, Eskom Group chief government. “The slowdown of financial exercise because of the pandemic led to an unprecedented decline in sales, which fell 6.7% from the earlier yr.
“Operationally, however, every crisis does bring with it an opportunity. In this case, Eskom used unfortunate lower demand presented by the lockdown to conduct much-needed maintenance at some of our power stations.”
Income elevated to R204.3 billion through the yr, from R199.5 billion the earlier yr. That is primarily attributed to an 8.76% annual improve within the electrical energy tariff through the interval, offset by a discount of 6.7% in sales quantity, the corporate mentioned.
Major power prices elevated by R3.8 billion primarily as a result of a rise of R3.1 billion in Renewable IPPs as a result of elevated manufacturing from these IPPs. The power availability issue (EAF) deteriorated to 64.19% from 66.64% the earlier yr. That is a direct consequence of the implementation of the reliability upkeep programme, necessitating extra deliberate upkeep.
There was a notable enchancment in transmission and distribution community efficiency, it mentioned.
“High levels of asset vandalism, equipment theft and overloaded networks continued to increase breakdowns and maintenance costs, limiting the return on investment and posing a safety risk. Of concern is the increase in electricity theft and illegal connections, which has necessitated load reduction in areas with a high incidence of illegal connections.”
De Ruyter mentioned that Eskom’s long-term goals of attaining operational and monetary sustainability are depending on the profitable implementation of the turnaround plan presently underway.
“The turnaround plan, which is overseen by a diverse executive committee (Exco), comprising 56% Black female representation, focuses on operations recovery, improving the income statement, strengthening the balance sheet, driving business separation and bringing about a winning, can-do culture,” he mentioned.
Regardless of a current critical setback with the explosion at Unit 4 of Medupi Energy Station, the construct programme is progressing properly, the group mentioned. Two items on the Kusile Energy Station achieved industrial operation through the yr below assessment, including an put in capability of 1,598MW to the nationwide grid.
“This brings the completion of the construct programme nearer, with half this energy station now accomplished. Vital progress has additionally been made in correcting the most important plant design defects at Medupi, with Unit 3 reaching full technology capability in April 2020.
“While there has been encouraging improvement in particulate emissions performance in Eskom generation fleet, the challenges at Kendal Power Station are being addressed.”
Eskom mentioned that its enterprise separation is on monitor. All the required documentation was accomplished and signed by 7 June 2021, thereby finishing the purposeful separation of the three-line divisions.
“Eskom is working in the direction of attaining authorized separation of the Transmission entity. A variety of dependencies are lagging behind, placing the finalisation of separation of the Transmission entity by 31 December 2021 at vital danger. Nevertheless, our intention stays to adjust to the timelines set out within the Division of Public Enterprises Roadmap, regardless of the obstacles encountered.
“The legal separation of the Generation and Distribution entities will be finalised within the 2022/2023 financial year,” it mentioned.
Eskom pointed to a 4.5% discount in worker numbers, with a complete of two,023 workers leaving the service of Eskom via pure attrition and voluntary separation. This had the impact of decreasing the headcount to 42,749 through the yr, from 44,772.
“This means that over the past two years, Eskom has reduced its workforce by just under 4,000 employees,” mentioned De Ruyter. “It must again be stated that not a single one of these was a forced retrenchment.”
Amongst these had been 74 voluntary separation packages granted to managerial degree workers within the 2021 monetary yr, additional decreasing worker profit prices and decreasing the supervisor: worker ratio. “This further helps improve Eskom’s operational efficiency,” he mentioned.
Regardless of the Covid-19 lockdown, Eskom mentioned 106,669 new prospects had been linked to the grid below the Division of Mineral Sources and Vitality’s (DMRE) electrification programme.
Unpacking the monetary outcomes, Eskom chief monetary officer, Calib Cassim, mentioned the strengthening of the Rand had a vital optimistic impression on outcomes for the yr.
Cassim said that Eskom’s liquidity remained a concern because of the excessive value of servicing the excellent debt, working capital necessities, escalating municipal arrear debt, and sub-investment grade degree credit score rankings, amongst different components.
“This picture is likely to remain unchanged in the short- to medium-term. However, reliance on government support mitigates the material uncertainty regarding Eskom’s status as a going concern,” mentioned Cassim.
Excellent municipal debt rose 26% to R35.3 billion within the interval. Amongst different challenges, Eskom is working carefully with the Political Process Crew led by the Deputy President. Eskom can be pursuing energetic partnership agreements with a few of the municipalities, during which it hopes to arrest the spiral in excellent debt.
“Cost savings alone is not a solution. Eskom’s capital position must be resolved. Cost-reflective tariffs and resolving the municipal arrear debt are required to implement Eskom’s turnaround and ensure long-term financial sustainability successfully. For its part, Eskom continues its concerted effort to reduce the debt and to improve gearing,” mentioned Cassim.
Eskom has to this point secured R16.2 billion of its R41.6 billion funding requirement for the 2022 monetary yr.