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South African parastatal Eskom responds to media reports regarding its liquidity challenges and financial sustainability.

The power utility claims to have always maintained that the 2.2% tariff increase for FY17/18 will present challenges to the company’s liquidity position for the current financial year.

As a result, Eskom has had to undertake certain financial commitments to ensure sufficient liquidity in line with its funding requirements, the power utility said in a company statement.

“Cost containment has been one of the key components of our strategy. The company’s cost-cutting measures are bearing fruit, with a saving of R47 billion [$3.2 billion] realised from the FY12/13 to FY17/18,” the parastatal explained.

In order to manage the surplus capacity Eskom has adopted an aggressive sales volume growth to support economic growth by encouraging increased local and cross-border sales. Read more…

Funding requirements

According to the state-owned entity, it has secured approximately 56% of the funding requirements for the current financial year.

However, the execution of the remaining funding requirement is largely dependent on Eskom being able to address the following:

  • The constitution of a new board of directors
  • Resolving internal governance related matters
  • The appointment of a permanent Group Chief Executive and Chief Financial Officer and other executive positions and,
  • Remedying the issues that gave rise to the qualified audit opinion on the FY17 financial result.

“Eskom is confident that the board of directors and the executive management team with the support of the South African Government will address the above-mentioned issues that have negatively impacted its liquidity.

“As such Eskom will maintain sufficient liquidity to support its operational and financial requirements,” the utility said.

Eskom’s interim group chief executive Sean Maritz said: “We remain resolute that we will fully execute the required funding for the year, albeit under challenging conditions. Our liquidity levels are not at the desired levels; however, they are sufficient to fulfil our commitments.”

 

Featured image: Stock