Cape Town - Eskom said on Thursday its net profit for the first six months of the financial year rose to R1.3 billion from R0.6 billion, but predicted its full year results would again be a loss in the order of R20 billion.
For the first six months, earnings before interest, tax, depreciation and amortisation also improved, reaching R30.6 billion, compared to R28.3 billion in the same period last year, while international sales improved, the power utility said.
But Eskom chairperson Jabu Mabuza said that for a number of reasons, the company was expected to post a loss for 2020 and its financial ratios were likely to deteriorate further before showing an improvement.
“As we know financial performance is seasonal, projections are that we will declare a loss for the full year’s results, similar to that of last year," he said.
"Contributing factors include revenue variance between the winter and summer periods with higher demand in the winter and higher winter prices, higher primary energy costs in summer due to higher production from renewable IPPs in summer, and increased price of coal, employee benefits from salary settlements and escalating municipal arrears debt."
Municipal debt has now reached R25.1 billion, a total increase of R5.2 billion since March, or an average increase of more than R850 million a month. The payment level for the 20 top defaulting municipalities is at 44 percent but in Soweto it is 16 percent.
The company's own debt has increased to R454 billion.
Mabuza noted that Eskom debt servicing obligations largely fall due in the second half of the year, increasing pressure on the company's liquidity.
"Projections indicate that we are unable to service debt and fund a portion of capex through cash from operations. We remain reliant on government support of R49 billion for the 2020 financial year and R56 billion for 2021 to ensure Eskom’s status as a going concern.”
A total of 61 percent of funding required for the 2020 financial year had been secured by September and Eskom has saved R5.6 billion, but some of this could be undone towards March 2020 by the need to spend money on diesel to stabilise the grid as plant performance had weakened.
Its generation plant performance had also decreased, said Eskom, with availability now at 70 percent compared to 75 percent in the same period of the 2019 financial year.
Eskom CFO Calib Cassim said the average partial load losses continued to exceed the target of 3,500 megawatt and unplanned maintenance had increased to 19.58 percent.
"This affects the reliability of our system and requires usage of diesel (OCGTs). Environmental performance and boiler tube leaks remain a challenge in some of our power stations, necessitating the shutting down of these units.
"In the last six months, both generation and transmission network performance has deteriorated, with generation plant availability declining to 69.92 percent from 75.0 percent for the same period last year. Generation continues to focus on operational and environmental recovery. Of concern is the high utilisation of the coal fleet”, said Cassim.
He stressed that cost savings alone could not lift the company over the massive financial hurdles it faced.
Eskom reported a financial loss of R20.7 billion in 2018/19.