South Africa’s state-owned power utility posted a fourth consecutive annual loss as it continued to service a mountain of debt, repaired ageing plants and lost electricity revenue because of a drop in demand caused by the coronavirus pandemic.
Eskom’s loss narrowed to R18.9 billion in the year to end-March, from R20.8 billion a year earlier, CEO Andre De Ruyter said during a televised briefing on Tuesday.
After growing unabated for about 15 years, the utility’s gross debt fell 17% to R401.8 billion thanks to a cash injection from the government, but it remains unsustainably high and plans are being made to reorganise it.
Electricity sales dropped 6.7% because of lockdown restrictions to curb the spread of Covid-19, the company said in a statement.
Eskom’s inability to provide sufficient power to meet the nation’s needs and its reliance on state bailouts to stay afloat have been a major drain on the economy. Its plans to build new capacity have been riven by corruption, cost overruns and government vacillation over what form of energy to use and the role private producers should play.
The government plans to split Eskom into transmission, generation and distribution units to make it easier to manage, while De Ruyter is taking steps to cut costs and stamp out the graft that’s plagued the company for years. He’s also trying to secure cheaper financing from development finance institutions in exchange for reducing the utility’s environmental footprint by increasing the use of renewable energy.
© 2021 Bloomberg L.P.