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  • keyboard_arrow_rightR21.1 billion projected Eskom financial loss only the tip of the iceberg

R21.1 billion projected Eskom financial loss only the tip of the iceberg

By: Natasha Archary

Minister of Electricity update
Image: Eskom

Eskom is in deep financial trouble, reporting a projected R21.1 billion loss in the past financial year.

This is a R7.6 billion bigger loss than the embattled power utility had budgeted for.

National Treasury was made aware of just how dire the situation is in the Parliamentary Meeting of the Standing Committee of Appropriations on Tuesday, 30 May.

Energy expert Tshepo Kgadima however says that the projected loss is only the tip of the iceberg, and that the actual financial loss experienced by the state-owned entity will be far worse.

Speaking to Nastassia Arendse on Kaya Biz, Kgadima said a number of impairment charges will likely take Eskom’s financial loss to well over R70 billion.

“The R21.1 billion loss that is projected is just pre-text, which means a loss before interest, depreciation and tax is factored in.

When the auditors release the final financial results, the situation is going to be far worse.

Eskom will have to further take an impairment charge on the municipal debt, which will be an additional R35.4 billion.

Additionally, an impairment charge on the long-list assets will also be effected, and we must bear in mind that Eskom currently has shutdown 15 000 MW of capacity.

In terms of the International Financial Reporting Standards that 15 000 MW can no longer be accounted for on the balance sheet of Eskom, and they will have to take that impairment charge as well.”

Energy expert, Tshepo Kgadima says the R21.1 billion projected loss by Eskom is only the tip of the iceberg

Kgadima says the actual financial loss from Eskom will likely exceed R70 billion in total. The impairment charges are once-off, but a loss of R21.1 billion should still be a concern because it means even the bailout by government will be insufficient.

The loss comes despite the staggering 9.61% electricity tariff increase in the last financial year and a R21.9 billion government bailout.

Eskom reportedly earned less revenue and spend more, especially on diesel, which more than doubled over the past year.

LISTEN: To the conversation on Kaya Biz

Also read: Ace Magashule faces expulsion from ANC after being found guilty of misconduct

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