Johannesburg - Struggling state-run power firm Eskom reported a R2.3 billion ($171 million) loss on Monday, underlining the enormity of the task facing President Cyril Ramaphosa, who has pledged to turn the company around.
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.
Ratings agencies regularly cite Eskom's R220 billion 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 R888 million in the previous reporting period.
CEO Phakamani Hadebe told the media on Monday that the negative results were heavily influenced by allegations of corruption and mismanagement.
Eskom said that its net cash from operations declined from R45.8bn to R37.6bn, and the company continues to be strangled by leadership issues and operational woes.
Eskom Chair Jabu Mabuza said there was R19.6 billion in irregular expenditure since 2012, and allot of this expenditure was reported in 2018.
"This was a result of us shaking the cupboard so hard that so many skeletons came tumbling down," he said.
"The verification and cleaning up exercise resulted in a significant increase in the number of reported irregular expenditure in 2018 (from R3bn to R19.6bn), with many of the items reported arising in prior years. Where information was not readily available, alternative methods were used where practical to identify irregular expenditure," Eskom said.
Eskom also added that its "transition towards financial and operational sustainability required resolute, tough and decisive leadership".
The utility's liquidity is a massive and growing concern, with municipalities owing the company R4.2 billion.
"Eskom continues to face significant financial and liquidity challenges in the short term, mainly due to the high debt burden, low sales growth and increased finance costs".
Eskom debt has increased from R387 to 600bn in just four years, Hadebe said.
"We have raised 22% to date of the R72 billion borrowing requirement for 2018/19, and have a firm commitment to increase funding to 62% of the 2018/19 borrowing requirement."
Hadebe added that growing investor appetite for Eskom bonds was a serious concern.