Eskom’s true annual loss is R70 billion – energy analyst

Independent economic and energy analyst Tshepo Kgadima said Eskom’s true loss for the last financial year is around R70 billion – much higher than the reported R21.2 billion.

The National Treasury recently told Parliament that Eskom reported a loss of R21.2 billion for the last financial year.

It is much higher than the budgeted loss of R13.6 billion and nearly double the loss before tax of R11.9 billion for the previous year.

These numbers point to a company in deep financial distress, but Kgadima said it is only the tip of the iceberg.

He highlighted that the Eskom numbers presented by the National Treasury are unaudited and do not provide the full picture.

He said the R21.2 billion loss should be seen as earnings before interest, taxes, depreciation, and amortisation (EBITDA) and not a comprehensive loss of the year.

With a full audit, impairment charges from long-outstanding would have to be added to Eskom’s annual loss. “I predict that auditors will have to impair at least R35.4 billion,” he said.

Add to that Eskom’s “artificial operating costs” and potential generation capacity impairments, and Kgadima predicts Eskom’s true loss for the year to be around R70 billion.

He said Eskom is in a very challenging position, and it is important for them to demonstrate that it remains a going concern.

The way to do it is for the power utility to show they have a plan to address the losses and return to profitability.

“The only way is to increase sales, but this is very difficult when its clients are migrating away from Eskom,” he said.

Eskom’s sales volumes were impacted by generation supply constraints associated with load curtailment, load-shedding, and poor economic conditions.

Many companies and residential customers are installing solar and battery backup systems, limiting their reliance on Eskom.

“Eskom doesn’t appear to have factored the negative effect of private power production on its sales into its outlook,” he said.