By Lehlohonolo Lehana.
State owned power utility Eskom said on Tuesday that its net loss in the financial year that ended in March 2023 had widened to R23.9-billion.
That’s from a revised R11.9-billion in the previous year.
Eskom interim CEO Calib Cassim said the 2023 financial results reflect the company’s challenging operational performance.
Cassim revealed that municipal debt to Eskom increased from R44.8 billion to R58.5 billion over the last year.
He also revealed that the utility’s energy availability factor worsened from 62.02% to 56.03% in 2023 due to generation supply constraints and shortfall from the IPP programmes.
These results follow a particularly challenging year for the power utility and South Africans.
The country experienced disastrous load-shedding. While the utility’s performance improved slightly in the past few months, 2023 is still the worst year on record for load-shedding.
Load shedding escalated severedly to 280 days, from 65 days in FY 2022, which impacted revenues. Load had to be curtailed by an estimated 13,476GWh, the group said, up from 1,605GWh in 2022.
This resulted in a staggering jump in spending on the group’s gas turbines, with spending more than doubling from R14.7 billion in 2022 to R29.7 billion in 2023.
Eskom is spent over R7,000 per MWh to run the generators, making it by far the most expensive form of generation. Given the constraints in the market, the price of generating power increased for all forms of energy, except for renewables, which saw a 2% drop in price.
In terms of wasteful expenditure, Eskom said it only incurred R105 million of new expenditure categorised as fruitless or wasteful, R2 million of which was recovered.
Looking ahead to the 2024 full year, Eskom expects its losses to continue, currently projecting another R23.2 billion loss for FY24.
While the 18.65% increase to tariffs for 2024 will boost revenues, this will be tempered by an estimated 2% decline in sales volumes.
Government has pledged to split Eskom into three subsidiaries to try to make it more efficient. In February, it agreed to take on more than half its total debt to bolster its finances.
Finance Minister Enoch Godongwana announced that Eskom would be receiving a R254 billion debt relief package.
This came after the utility said in its results presentation last year that “without government support, Eskom will not be able to meet all its debt service commitments”.
This bailout is aimed at strengthening Eskom’s balance sheet to free up money for the utility to undertake plant maintenance and improve the transmission and distribution infrastructure as the country battles record electricity outages.
Eskom’s debt burden stood at R423 billion in February.
As part of the plan, the government was due to provide Eskom with three annual advances totalling R184 billion through March 2026 to repay maturing debt and cover interest costs.
This debt relief should lighten the utility’s debt burden and give it some flexibility to invest in the maintenance of its ageing power stations and the expansion of its grid.
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Video Courtesy of Eskom.