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JOHANNESBURG – Eskom Chairman Jabu Mabuza confirmed Wednesday that the electricity company was facing serious financial difficulties and acknowledged that Eskom, in its design and operation, was not viable.
"We are stuck in a permanent loss position to the extent that our revenue growth is structurally limited, our operating expenses have exploded due to internal inefficiencies and the level of debt is incredibly high. "said Mabuza.
"The company's operational and financial performance quickly deteriorated in the first six months of this year, and in the last six months alone we have seen significant EBITDA [earnings before interest, tax, depreciation and amortization] margin compression coupled with a further decline in our plant's performance ".
Eskom said its turnover increased by 3% to 98.1 billion rand for the period ended September 30, against 95.5 billion rupees for the same period of the previous year, but that the profit net plunged 89% to 671 million rand. R6.3 billion last year.
Eskom said its financial ratios have deteriorated and are expected to deteriorate over the next six months. The electricity company said its turnaround would not happen overnight because its financial situation is expected to improve only by 2023.
The state-owned company said it was in a debt-dependent liquidity situation resulting in low tariffs, a 0.8% decline in sales volumes since the beginning year, rising costs related to primary energy and employee benefits, as well as an ongoing construction program.
"In other words, we do not sell enough electricity and not at prices that cover our costs all along the value chain.We do not collect everything we have sold, but we spend more and have to borrow more. at higher costs to reimburse what we borrowed before and can not afford to repay our declining profits, "said Mabuza.
"This is indeed an extremely dangerous position that is a function of our own internal inefficiencies and exacerbated by external factors, so we must take bold steps today to save Eskom and bring it back to financial viability."
Mabuza said that without significant changes, Eskom would run the risk of less committed funding sources, which would further increase its financing costs and could create business continuity problems in the medium term.
– African News Agency (ANA)
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