South Africa’s ailing rail and port utility, Transnet, owes Eskom R503 million as of the end of March 2023. It is one of only two customers, besides municipalities, owing over R100 million.
This was revealed in Eskom’s annual results presentation for the financial year ended 31 March 2023, where it reported a loss of R23.9 billion.
Eskom has been plagued by increasing debt owed to it by customers, particularly municipalities, which has effectively robbed the utility of vital cash needed to fund its maintenance programmes.
The utility revealed that municipalities owed it R58.5 billion as of the end of March 2023, a 31% increase from the previous year.
More concerningly, the payment rate of municipalities has declined further to 76%.
Many of these municipalities have blamed their inability to pay Eskom on the failure of their customers to pay them for the distribution of electricity.
Eskom also supplies some large industrial users directly with electricity, particularly miners. One of the customers supplied directly by Eskom is Transnet, which owes the utility R503 million with no plan to pay it back.
The only other large customer to owe over R100 million to Eskom is Electricidade de Moçambique (EDM), which remains the only international customer in arrears, with R574 million outstanding.
Electricity Minister Kgosientsho Ramokgopa has previously said he is deeply concerned about the financial health of many municipalities that owe Eskom billions.
“The finances of municipalities are very illiquid. Some are insolvent and are not raising sufficient revenue to meet their operational activities.”
The Minister would also be right to be concerned about the financial health of Transnet and its ability to pay back the debt it owes to Eskom.
Transnet also declared a loss for the past financial year, albeit much smaller than Eskom’s at R5.2 billion.
The crisis at Transnet has been compared to the one at Eskom, with some experts saying it is much worse and more complex than the power utility.
Managing director at Krutham Peter Attard Montalto said that the problems at Transnet are even more complex than those at Eskom due to the nature of the organisation.
“Transnet is even odder than Eskom in many ways as it has quasi-regulatory functions. For example, it implemented third-party rail access when it should not have, as an independent regulator should do that,” Montalto said,
It also has deep conflicts between parts of its business, with its rail operator and infrastructure manager regularly butting heads.
There is also no clear turnaround plan for Transnet. Last month, it submitted a plan to the presidency to reverse the country’s logistics crisis, including a request for the National Treasury to take on R61 billion of its debt.
Transnet said a healthier balance sheet is required to finance its rail infrastructure maintenance.
However, this will not address the structural issues at the utility, which has resulted in its collapse and inability to pay Eskom.