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André de Ruyter, Eskom CEO, says that the Eskom division has been finalized, with completion forecast in the first half of 2021. (Photo: Gallo Images / Business Day / Freddy Mavunda)
The state power company posted a small gain on its interim results released Monday. That’s not supposed to last – financial performance is expected to worsen for financial year 2021, with an expected annual loss of R22 billion.
Eskom said in a statement that it had achieved a net profit of R83 million during the six months to September 2020. But the financial lights are already fading and the company said that “its financial performance is expected to deteriorate in the second half of the year. financial period “. year due to seasonality factors, with greater maintenance and summer expenses necessary to guarantee security of supply, together with lower demand and lower summer rates ”.
Chief Financial Officer Calib Cassim said this was forecast to lead to an after-tax loss for fiscal year 2021 of approximately R22 billion.
Of course, maintenance is crucial to keeping the lights on and the utility company said its “reliability maintenance program is in full swing,” with more than 15% of capacity under planned maintenance, which equates to more of two large power plants. They are the unplanned outages in addition to the ones that usually lead to a load outage.
Surprisingly poor municipal governance remains a financial drain. Municipal debt arrears increased to R32.9 billion as of September 30, 2020 from R25.1 billion in September 2019.
And Eskom’s own debt remains a major concern. As of September 30, Eskom had secured R19.6 billion, or 48% of its financing needs of R40.7 billion for the financial year.
“The shareholder provided another 6 billion rand in support, and the remainder of the 56 billion rand pledged by the government is expected by the end of the year,” Eskom said.
But Cassim warned that “our access to financing in domestic and foreign markets remains limited, due to low investor confidence as a result of poor financial performance, saturated borrowing capacity and recent downgrades. These factors have a direct effect on market appetite and the future cost of Eskom’s loans may make it difficult to execute on our loan program. ”
The “junk state” has a major impact on borrowers.
The group’s executive director, André de Ruyter, said that the “Eskom split has ended”, with completion expected in the first half of 2021. So, in the face of considerable union and political opposition, the Eskom split into three separate units: generation, transmission and distribution – seems to be on the right track. This is the great development to follow in 2021. BM / DM
