How Eskom, South Africa’s power utility, lost $171 million

PUBLISHED: Mon, 23 Jul 2018 11:43:41 GMT

JOHANNESBURG (Reuters) – South Africa’s struggling state-run power firm Eskom reported a 2.3 billion rand ($171 million) loss on Monday, underlining the enormity of the task facing President Cyril Ramaphosa, who has pledged to turn the company around.

Eskom, Africa’s largest public utility, was embroiled in corruption scandals under former president Jacob Zuma and narrowly avoided a liquidity crunch early this year after banks halted lending. Zuma has denied any wrongdoing.

It supplies more than 90 percent of South Africa’s electricity, and ratings agencies regularly cite its 220 billion rand of government-guaranteed debt as a threat to the country’s sovereign credit ratings.

Eskom pegged the loss for 2017/18 financial year ending March on increases in financing costs and depreciation compared with a profit of 888 million rand in the previous reporting period.

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“Eskom is undoubtedly facing one of the most difficult times in its history,” Eskom chairman Jabu Mabuza said.

The utility’s executives told a news conference it had 22.7 billion rand liquidity by the end of the financial year.

Eskom reported about 20 billion rand of irregular expenditure incurred since 2012, as the firm combs its financials for evidence of wrongdoing.