South Africa’s scandal-plagued power utility Eskom said on Monday it was not insolvent but was facing serious liquidity issues and would be in “trouble” if the situation persisted.
Eskom, the sole power supplier in Africa’s most industrialised economy, is also in midst of leadership crisis and has been at the heart of allegations of illegal contracts and undue influence in awarding tenders to the Gupta family, friends of President Jacob Zuma.
Zuma and the Guptas have denied any wrongdoing.
Eskom spokesman Khulu Phasiwe said the firm’s sales growth had been muted while its operating cost were very high and its tariff for the current financial year were low.
“We are not insolvent but we are projecting that if we continue along this trajectory we might be in trouble,” Eskom spokesman Khulu Phasiwe told Reuters.
“We as company we need to sort ourselves out and get our house in order so that when we go out to the market to raise money these things do not become a hindrance,” said Phasiwe.
Online publication Fin24 and EE Publishers on Monday said the utility’s liquidity reserves are expected to fall to 1.2 billion rand ($82.65 million) by the end of November compared to a target of 20 billion rand.
In its annual results for the financial year ended in March the utility reported a score of losses, saying it expected cash and cash equivalents to fall 8.6 billion rand ($598 million) to 20.4 billion rand.
($1 = 14.5198 rand)
Reporting by Tanisha Heiberg and Mfuneko Toyana; Editing by James Macharia