Johannesburg - National Treasury says the national regulator’s decision on whether to grant Eskom a tariff hike, as well as R60bn in clawback tariffs, could help improve the state utility’s liquidity squeeze.
Fin24 and EE Publishers on Monday reported that the power utility’s poor governance had left it teetering on the edge of insolvency, with only R1.2bn of liquidity reserves expected to be in hand at the end of the month.
This was based on Eskom’s latest report to its shareholder representative, Public Enterprises Minister Lynne Brown, which showed that its liquidity was fast drying up, as it struggled to raise funds in an unsympathetic market.
National Treasury confirmed to Fin24 that it had received the second quarter report this week.
“The team is still reviewing it,” Treasury said, adding that Eskom was exploring alternative sources of funding.
It said the energy regulator, Nersa, still has to pronounce on the tariff increase for 2018/19 and to also implement the Regulatory Clearing Account (RCA) clawbacks, which will assist with Eskom’s liquidity.
Nersa was currently holding hearings to determine whether Eskom's application for a 19.9% increase was justified.
Eskom's current request comes on top of its pursuit of up to R60bn in the delayed clawback tariffs, after the Constitutional Court dismissed an application in July to set aside the power utility's RCA adjustments.
Three years of delayed tariffs have to be recovered by the state utility as a result of the holdup of the case.
Both the clawback tariffs and the requested price hike will essentially pass the buck to the consumer to raise funds for Eskom.
Also on Monday Eskom’s interim group chief executive Sean Maritz said that while the power utility’s liquidity levels were “not at the desired levels”, they were sufficient to fulfil its commitments.
Eskom said ithe 2.2% tariff increase for the financial year 2017/2018 was never enough to keep its liquidity position stable.
“As a result, Eskom has had to undertake certain financial commitments to ensure sufficient liquidity in line with its funding requirements,” Eskom said.
But DA Public Enterprises spokesperson Natasha Mazzone on Tuesday said the opposition was gravely concerned about Eskom’s collapse, in the face of the liquidity challenges.
With limited cash available, Eskom may have to approach National Treasury to finance a bailout, she said.
“South Africa simply cannot afford yet another state entity facing imminent collapse as a result of financial mismanagement.”
The economic implications of Eskom collapsing, Mazzone stated, will be severe, as it will have a negative impact on our already struggling economy, sovereign rating and threaten the job security of many South Africans.
“Government should have never allowed the situation to get to this point.”
She said the DA would request the Portfolio Committee on Public Enterprises chair Mnganga-Gcabashe, to urgently call the Minister of Public Enterprises, Lynne Brown, Eskom bosses and the Eskom chair to account before the committee and present an accurate picture of the financial situation at Eskom.
This comes after a report Eskom presented to Government, as the major shareholder, revealed that the power utility only has R1.2bn left in its cash reserves until the end of November 2017, when it should have R20bn.
“The DA is gravely concerned about the current state of Eskom’s finances as it is quite clear that the rife corruption and mismanagement at the power utility has resulted in this dire deterioration of its finances,” she said.