South Africa’s Eskom Sees Loss Widening to $1.5 Billion

JOHANNESBURG (Capital Markets in Africa) – South Africa’s state-owned power utility Eskom Holdings SOCLtd. expects a loss of around 20 billion rand ($1.49 billion) for the financial year through March.

The estimated loss “is our view based on December 2018 forecasts to year end,” Eskom said in an emailed reply to questions, and due to higher costs to meet demand and to address generation performance.

Eskom has said its situation is unsustainable and the government is reviewing steps the utility can take to start emerging from 419 billion rand of debt and contend with waning demand. Costs have increased for coal, which most of its fleet uses to generate power, and for additional repairs to new plants that are years behind schedule and over budget.

Chief Financial Officer Calib Cassim on Jan. 15 revealed that Eskom’s loss would be bigger than the 15 billion rand the utility initially anticipated.

Eskom needs to fix its cost structure and requires above-inflation tariff increases, or the government should be prepared to increase the level of recapitalization, Chief Executive Officer Phakamani Hadebe said Monday at a mining conference, in Cape Town. The company is too big and ultimately it will need to be unbundled, he said.

“Once we have a solution; the next challenge is the execution,” Hadebe said.

Source: Bloomberg Business News