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Eskom, which faces serious financial difficulties, has seen a steady decline in the performance of its facilities and its supply of coal, which could threaten its ability to keep the light, said Wednesday President Jabu Mabuza.
When publishing the semiannual 2018-2019 results of the electricity producer, Mabuza said that its current mode of operation "is not sustainable".
Profits fell 89% to 671 million rand in six months, or $ 6.3 million the year before. Financial costs increased to R15.2 billion, compared to R119 billion.
"We are locked in a position of permanent loss," he said.
"We need bold steps to save Eskom … there has to be some pay for the problems Eskom identifies on – there is no option not to repair – and fix will cause a little pain. "
Mabuza said they were urging stakeholders to find a financial alignment, with the aim of saving around 30 billion rand over the next five years.
He also confirmed the permanent appointment of Calib Cbadim as CFO.
Intermediate results showed that most financial ratios deteriorated and municipal arrears continued to deteriorate – from 13.6 billion rand earlier in the year to 17 billion in September.
Phakamani Hadebe, CEO of Eskom, said that despite a stimulus package, load shedding could not be ruled out for the remainder of 2018.
"We will do our best, but South Africans need to know that the risk exists," he said.
The risk remained high, with Eskom facing severe coal shortages in 10 of its 15 coal plants and a large number of unplanned outages due to several years of poor maintenance.
Eskom said it would spend as much as an additional R1 billion in diesel to run open-cycle gas turbines over the next four months to keep the lights on during planned maintenance.
Cbadim said at Wednesday's event that the utility company would likely record a pre-tax loss greater than the amount of 11.2 billion rand that he had budgeted for the whole of the year.
A mammoth debt of about 400 billion rand weighs heavily on the utility, which indicated that debt servicing costs amounted to 45 billion rand, the cash flow from operations not representing only about 27 billion rand. Primary energy costs increased 12% to 46 billion rand. Employee benefit expense also increased 12% to R169 billion.
"We do not sell enough electricity, or not the prices that cover our costs," said Hadebe. "We do not collect everything we sold."
Mabuza said that while management has made significant progress in corporate governance, "no matter why we are where we are; what matters is how we are going to cope. "
A recovery plan must be put in place immediately if Eskom has to go through another year, he said.
Basically, this meant reducing Eskom's costs, increasing revenues and reducing debt. The public service would also seek to restrict its different parts to increase cost transparency.
Mabuza said that an injection of stock or debt relief was needed, although Eskom has not yet had this discussion with the finance minister.
Meanwhile, the final report of Parliament's Eskom inquiry was adopted on Wednesday with unanimous support from all political parties.
The committee of state-owned companies that conducted the investigation found that former public enterprise ministers – Malusi Gigaba and Lynne Brown – had "committed gross negligence" in discharging their responsibilities.
The committee found that there had been corruption of procurement processes in Eskom and that there was a corrupt relationship between the Gupta family, their badociates and the state's top officials.
With Linda Ensor
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