Eskom has reported that its senior executives will not take their annual bonuses for the financial year 2013/14 in light of the R225 billion revenue shortfall experienced over the five-year period between 2013 and 2018.
The interim CEO Collin Matjila says, “The top executives at Eskom have acknowledged the financial constraints by agreeing to forgo their annual performance bonuses this year as one of the efforts to cut costs. The board welcomed this move as the company is implementing efficiency intervention initiatives to achieve long-term financial sustainability.”
The National Energy Regulator of South Africa (Nersa) approved a tariff increase of 8% which left Eskom with a funding gap. Eskom moved to set up a programme called the business productivity programme (BPP) in 2013 to extract efficiencies within the business.
“It became necessary to rally around all our employees to deliver efficient services with less resources. We will continue to drive a conscious and concerted effort to cut waste across our business,” Matjila says.
To this end, at the beginning of Eskom’s financial year, April 2014 the Eskom board and executive committee established a special joint committee that is considering a range of non-conventional sustainable funding solutions, including equity/equity-like instruments.
“While significant shifts have been made in terms of business operations to achieve internal efficiencies, the company is certain that this revenue shortfall cannot be achieved by belt tightening alone. It remains important to move towards a cost-reflective tariff urgently. Eskom, through its shareholder ministry, the Department of Public Enterprises, is in discussion with the National Treasury to find a long-term solution,” Matjila says.
“It is important that Eskom remains financially sustainable to enable us to keep the lights on whilst we complete the new build programme that will ease the pressure on the national grid,” he concludes.
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