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Eskom's profit in the first half of the year has dropped by 89 percent and the situation of the South African power company is expected to worsen over the next six months, said President Jabu Mabuza.
Profits fell from 6.3 billion a year earlier to September to 671 million rand in September, while financial costs increased from 11.9 billion to 15.2 billion rand, the company said Wednesday in Johannesburg .
The company's debt burden is "incredibly high," said Mabuza, even as it reported improved liquidity and announced that 73 percent of funding for 2018-2019 was secure. "We do not sell enough electricity" to recover the costs, he said, noting that sales volumes had dropped 0.8% over the period. "Eskom is in serious financial trouble."
Eskom is struggling with high debt and declining demand as it must take steps to deal with multiple scandals involving corruption and mismanagement. In the meantime, the threat of power outages is being felt, which would add further pressure on the economy that plunged into a recession earlier this year.
Read: Lawmakers refer Eskom presidents for criminal investigation
The utility has had low coal inventories and fuel costs increased by 7% in the first half of the year. Electricity produced by independent producers increased by 29%, mainly due to higher volumes. A wage settlement higher than expected earlier this year weighs on the balance sheet, he said.
Acting Chief Financial Officer Calib Cbadim has been appointed to this position on a permanent basis.
© 2018 Bloomberg L.P
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