Investors hail Eskom’s debt reduction by R83 billion – Reuters
Investors applauded the news that Eskom managed to reduce its debt by R83 billion in the year through March.
Public Enterprise Minister Pravin Gordhan made the announcement during his ministry’s budget vote in Parliament.
News of Eskom’s big debt reduction marks a big turnaround for the beleaguered utility. Two years ago, Eskom was on the verge of defaulting on its massive debt, which stood at Rand 419 billion.
The government had to step in and secure an emergency loan of Rand 3 billion for the electric utility. Debt then soared to 484 billion rand last year. The public service seems to have made a positive turnaround.
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Gordhan also announced that Eskom’s savings measures brought the company R13 billion in the last fiscal year.
It remains to be seen whether this will have an impact on the latest round of wage negotiations with unions which is due to start on Monday.
The unions are demanding a salary increase of between 9% and 15%. Management maintains that these demands are unaffordable. He has submitted a 1.5% offer which he says is final.
Eskom says the parastatal unbundling is on track:
Electric utility Eskom says the unbundling of the parastatal into three entities is on track.
Eskom says the process of splitting the company into three separate entities will cost R500 million. Most of the money will be spent on information technology, including system changes, configuration, data transfer and the implementation of new entities.
The electricity utility will be divided into three divisions, namely transmission, generation and distribution.
In a briefing to the SOE Select Committee, CEO Andre De Ruyter said the functional separation of the three entities has already been completed while the legal separation will be concluded by the end of next year.
The company says the remainder of the money will be used to engage with international and local lenders, and modify lender contracts where appropriate. There will also be an amount for the creation of entities, including modification of contracts, transfer of land and modification of commercial contracts.
De Ruyter says the exercise has been difficult. âThis is indeed an ambitious request, particularly in terms of deadlines. The typical timeline for restructuring of this magnitude and of the private sector is a number of years and, without indulging in any personal praise, I would venture to suggest that so far Eskom is moving very quickly to complete the process. restructuring with the deadlines required by the roadmap. We are therefore on schedule. We have highlighted some of these aspects concerning in particular the conclusion of the necessary legislative amendments and we look forward to being considered, inter alia, by the Intergovernmental Steering Committee. “
Asked whether this unbundling will lead to job losses, De Ruyter assures Eskom workers that there will be no forced layoffs as a result of the restructuring process. He adds that the conditions of service will not be affected by their transfer to the new divisions.
âTheir terms and conditions of service will not be impacted and in fact their payslip at the end of each month should still tell Eskom. So we do not foresee any change even though they may be moved from Eskom Holdings as an employer to, for example, Eskom Generation Pty Ltd as an employer, but the terms and conditions of service will not be affected. .
The CEO also informs the committee of the measures taken to recover the sums lost due to corruption.
âWe got 1 billion rand from McKenzie, we got 577 billion rand from the AfDB. We recovered 71 billion rand from Deloitte Consulting. We are in the process of recovering some R108 million from PWC. We have brought a lawsuit against 12 former members of Eskom’s board of directors and members of the Gupta family for the recovery of some 3.8 billion rand of embezzled money. We have also launched a number of claims to recover 1.2 billion rand overpaid for the supply of fuel oil.
Measures have also been taken against those involved in the company.
âWe have also laid a number of criminal charges. Some 110 criminal charges have been filed with law enforcement. Two former Eskom leaders have already been arrested and appeared in court and we look forward to more arrests. We also recently suspended a senior executive in the primary energy division and a bank account containing some R11 million in the morning at the senior manager was joined by the asset forfeiture unit. ” Additional reporting by Joseph Mosia