South Africa’s power utility company, Eskom, is showing signs of progress, according to the company’s Interim Results for the six months’ period ended September 2020.
The company, which hitherto was struggling, has reportedly achieved progress in some key areas of the business, setting it on a path to operational and financial stability.
According to report by Esi Africa, the company’s earnings, before interest, taxation, depreciation and amortisation (EBITDA) increased to R28.1 billion from R26.4 billion in September 2019.
Eskom recorded a net profit, after tax, of R83 million while navigating a very challenging operating environment.
Revenue grew to R108.7 billion compared to R107.5 billion in the same period last year, marking an increase of 1.1 percent.
Sales volumes fell 10.3 percent in the period as a result of the COVID-19 national lockdown that took effect in March 2020.
Employee benefit costs and other operating expenses were well contained with employee benefit costs marginally increasing to R16.7 billion, compared to R16.4 billion in September 2019.
In its attempts to rein in costs, Eskom relied mainly on natural attrition and voluntary separation packages for managerial staff to reduce headcount, and there were no salary increases or incentive bonuses for managerial level staff.
Primary energy costs rose to R54.3 billion in the period, versus R52 billion in the same period last year, a 4.4 percent increase.
Eskom has redoubled its efforts to curb coal costs, which remained relatively manageable, with an increase of only 4.6 percent in the average purchase cost per ton of coal compared to 14.2 percent in September 2019.
However, Eskom and IPP open-cycle gas turbines (OCGTs) were utilised frequently to support a strained power system. The Eskom OCGT’s generated 496GWh at a cost of R1.4 billion in the period, an increase from the R1.1 billion spent on 331GWh during the same period last year.
Eskom’s Chief Financial Officer, Calib Cassim said: “Despite having achieved 48 percent of our funding requirements during the period under review, our access to funding in both domestic and foreign markets remains constrained due owing to low investor confidence as a result of poor financial performance, saturated borrowing capacity and the recent rating downgrades.”
The utility’s CFO added: “These factors have a direct effect on market appetite and Eskom’s future cost of borrowing and may hinder execution of our borrowing programme. Eskom will however continue to explore all avenues.”
Source: www.energynewsafrica.com
