“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,” interim CEO Collin Matjila said in a statement.
Eskom is South Africa’s main electricity utility, and has been under severe pressure to increase its electricity capacity for the growing nation.
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Despite Eskom’s approved tariff increase of eight per cent by the National Energy Regulator of South Africa (Nersa), it nonetheless left the power utility with a funding gap.
This contributed to the 225 billion rand revenue shortfall experienced over the five-year period between 2013 and 2018.
Eskom thereafter set up the Business Productivity Programme (BPP) in 2013 to extract efficiencies within the business.
“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,” Matjila explained.
“Eskom, through its shareholder ministry, the Department of Public Enterprises, is in discussion with the National Treasury to find a long-term solution.”
(READ MORE: Eskom to implement sustainability strategy)
Apart from establishing the BBP, Eskom also set up a joint committee responsible for considering a range of non-conventional sustainable funding solutions, including equity and equity-like instruments.
“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,” said Matjila.