Johannesburg — South Africa’s power utility Eskom said on Tuesday it expected to make a loss of around 20 billion rand ($1.4 billion) in the 2019/20 financial year, a similar loss to the previous year due to a steep increase in debt-servicing and fuel costs.
Eskom, Africa’s largest power generator and South Africa’s most indebted state firm, said it made a wider loss of 20.7 billion rand in the year to end March, from 2.3 billion rand in the prior year.
The struggling utility said it also expected negative cashflow of 5 billion rand, despite large bailouts from the government.
Eskom, which supplies 90% of South Africa’s power, was forced to implement blackouts this year because of capacity constraints and is reliant on bailouts as it does not generate enough cash to meet its debt-service costs.
The government has proposed giving Eskom a 59 billion rand cash injection over the next two financial years, in addition to 230 billion rand of bailouts spread over the next decade.
Analysts say even those bailouts won’t be enough to make Eskom sustainable in the long term.
Government officials and bankers are working on other options like swapping Eskom debt for government bonds or moving its debt to a government-owned special purpose vehicle. The government has also said it will split Eskom into different entities for generation, distribution and transmission to make it more efficient.
- Reuters
