Page 10 - Energize Issue 1 2023

INDUSTRY NEWS

Due to higher sales volumes and the
favourable electricity tariff increase of 15,06%
revenue increased to R246,5 billion, from R204,3
billion in March 2021. Earnings before interest,
tax depreciation and amortisation (EBITDA)
improved by 61% to R52,4 billion, from R32,6
billion the previous year. The gross outstanding
debt was further reduced to R396,8 billion in the
period, from R401,8 billion a year earlier.
At the operating level, Eskom increased profit
more than three times to R20,4 billion, from R6
billion in March 2021.
Cash from operations improved from R31
billion to R53,4 billion, mainly as a result of the
substantial increase in EBITDA. However, the cash
from operations was not sufficient to cover debt
servicing costs of R70,7 billion.
Despite the severe Generation capacity
constraints in this period, electricity sales volume debt by municipalities must be resolved. Eskom waits in anticipation for the
increased 3,4% to 198 281 GWh, from 191 852 Nersa price decision on 12 January 2023 and the government’s debt relief
GWh in 2021. solution to be announced in February next year,” added Cassim.
“The year 2022 was a tremendously difficult Cassim further added: “A net loss after tax of around R20 billion is expected
one for Eskom. Not all our priorities as outlined for the financial year ending 31 March 2023. This is mainly attributable to
in the Eskom Turnaround Plan could be achieved, OCGT spend exceeding the Nersa allowance, growth in municipal arrears and a
particularly improving the reliability and shortfall in recovering debt service costs in the electricity tariffs.”
predictability of the generation fleet following On the operational front, headcount was reduced to 40 421 employees,
years of inadequate maintenance coupled from 42 749 in 2021. This was due to natural attrition and voluntary separation
with the current and increasing shortage of
generation capacity of between 4000 MW and
6000 MW in the country,” said André de Ruyter,
Eskom’s group chief executive.
“In spite of the marked improvement in the
financial performance and good progress on
the new build programme, the disappointing
performance on the generation front is an
indication that there is still a long way to
go before Eskom can achieve long-term
sustainability,” added De Ruyter.
Eskom received R31,7 billion equity support
from government during the 2022 period.
While this government support and the cost
containment measures helped improve liquidity,
Eskom’s liquidity remains constrained because
of unsustainably high debt servicing costs. “Cash
from operations remained insufficient to meet
debt servicing and some capital investment
requirements,” said Calib Cassim, Eskom’s chief
financial officer.
Municipal and residential area debt remained
a challenge, with arrear debt by municipalities
escalating by R9,5 billion year-on-year, reaching a
high of R44,8 billion in March 2022.
“Eskom’s capital and tariff structure need to
be permanently resolved to ensure long-term
financial sustainability. In addition, the overdue

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