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Eskom said today that its operating and financial performance continued to deteriorate during the six months to September, with the situation deteriorating before improving by 2023.
Eskom Group Managing Director Phakamani Hadebe announced that the company's interim financial results for the period under review increased slightly, reaching R98.1 billion, compared to the previous period of $ 95.5 billion, mainly due a tariff increase of 5.2% implemented in April year.
But Eskom's net profit fell 89 percent to 671 million rand from 6.3 billion last year. Hadebe said that Eskom was facing serious operational and financial problems.
"There will be pressure in the short and medium term as the transition to financial and operational sustainability begins, which will require strong, hard and decisive leadership. Eskom has set an ambitious recovery plan, largely under its own control, to improve financial performance by 2023, "said Hadebe.
He added that Eskom was currently in a debt-dependent liquidity situation due to low rates, limited sales growth, rising costs and a capital investment program. rising.
Hadebe added that Eskom was facing a decline in production, low stocks of coal and an increase in municipal debt.
"Despite these challenges, Eskom's board and management have focused on five key priorities to create a platform for future growth," he said.
"These include the resolution of governance control issues; improved liquidity; ensure a financially viable entity; complete phase 1 of the strategic review and implement a nine point recovery program. "
Calib Cbadim, the newly appointed chief financial officer, said most of Eskom's financial ratios had deteriorated in the period under review, and the situation was expected to worsen in the second half of the year. .
On the cost side, Eskom said the recent wage increases for bargaining forum workers have also highlighted cost pressures, with wage costs rising 12 percent to R16.9 billion. 15.1 billion rand for the same period last year. year.
According to Eskom, the costs of independent energy producers increased by 29%, mainly due to the 25% increase in volumes, while coal costs were contained at 7%.
Historically, the profitability generated during the first half of the year has been eroding in the second half of the year, due to the reduction in summer rates and the increase in planned maintenance.
Eskom said wage settlements would also be pbaded on over the next six months, combined with increased use of diesel to avoid or minimize load shedding.
"Eskom can not solve the financial and operational sustainability issues it faces alone. The shortfall in fares can not be solved except through cost reductions and increased debt adds to the problem, "Cbadim said.
Jan Oberholzer, director of operations, said the power system would remain limited in the near future, until plant performance and coal stocks improve. This means that load shedding in the coming months remains a risk.
– African News Agency (ANA)
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