UPDATE 3: Eskom in South Africa says auditors are questioning its ability to survive
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Auditors cite past ‘financial irregularities’
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Utility reports net loss of $719 million for 2022
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This year, expect a bigger loss
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Eskom states that it is dependent on government support
(Adds detail to the financial statement.
By Bhargav Acharya, and Kopano Gumbi
JOHANNESBURG – December 23rd (Reuters) – South Africa’s Eskom announced Friday that auditors have questioned Eskom’s ability as a continuing concern due to past financial irregularities.
The country’s largest power producer has had a difficult time meeting electricity demand for many years. This year, outages at its old coal-fired power stations reached record levels.
It reported Friday a net loss in excess of 12.3 billion rand ($719 Million) for the year ended March. The company also warned that it expects a loss of more 20 billion rand during the next year.
President Cyril Ramaphosa’s administration tried to reform Eskom, but there has been little progress.
Auditors Deloitte & Touche LLP in a report said there is “a material uncertainty relating to Eskom’s ability to continue as a going concern,” the utility said in its annual financial report.
It added that auditors had cited “various irregularities” in financial reports from prior periods.
Auditors found that the utility failed to correct its breach of the National Environment Management Act. They also discovered that there was a backlog in forensic cases and that “management is not meeting requirements of the National Treasury Regulations”.
The Eskom did not investigate the incident and claimed that financial documents were “purposefully destroyed by fire” when they were requested for audit purposes.
Eskom responded by saying that it was investigating the incident, and was closing down a disciplinary procedure against one individual.
Eskom stated that the employee will be disciplined once they have completed their work.
The company’s annual report revealed that gross debt and borrowings were 396.3 billion rand. This is down from 401.8 million a year earlier.
“We can only continue as a continuing concern on the basis the support we have received up to this point from government and the ongoing support that is earmarked going ahead,” Calib Cassim, Chief Financial Officer, stated at a briefing after the results.
The Treasury announced in October it would assume one-third to two-thirds (or more) of the utility’s debt. More details about the restructuring will be available in the February budget.
Andre De Ruyter, Eskom CEO, resigned last month citing a lack in political support that made his position “untenable.”
The unprecedented power outages this year have caused public frustration and damaged businesses.
($1 = 17.1026 rand). Edited by James Macharia Chege, Jason Neely