Auditors question Eskom’s ability to continue operating

Auditors at Deloitte have questioned Eskom ability to continue operating.

The auditing firm raised, among other matters, that there is “a material uncertainty relating to Eskom’s ability to continue as a going concern”, the utility said while announcing its annual results at a news briefing.

Eskom said its auditors had pointed towards “various irregularities reported in prior financial periods”.

The auditors also found the utility had failed to take corrective measures after breaching the National Environment Management Act and added that the “management is not meeting the requirements of the national treasury regulations”, Eskom said.

The utility reported further losses for the year ending March 2022 and forecast even deeper losses in the 2023 financial year, while its debt remained high.

“We are only able to continue as a going concern on the basis of the support that we received to date from government and the continued support that is earmarked going forward,” said Eskom’s chief financial officer Calib Cassim at the briefing.

The announcement comes on the back of CEO Andre De Ruyter’s resignation from the top job earlier this month. De Ruyter has said a lack of political support had made his position “untenable”.

Eskom, which has a monopoly, reported a R12.3-billion net loss in the year ended March 2022, versus a restated R25-billion loss in the same period last year.

Losses to widen

The utility also forecast a net loss of R20.1-billion rand in the 2023 financial year.

Gross debt and borrowings fell to R396.3-billion at the end of March versus R401.8-billion reported a year ago, Eskom said.

Saddled with an ageing fleet of coal-fired power stations and a mountain of debt, Eskom has struggled for years to meet electricity demand.

This year the country has witnessed unprecedented power cuts, with more electricity shed from the national grid to date than ever before. This has led to public frustration, damaged businesses and prompted calls for resignations at Eskom.  — Bhargav Acharya and Kopano Gumbi, (c) 2022 Reuters

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