Eskom is expected to deliver worse than expected financial results with the power utility a major risk to South Africa’s fiscal targets.<\/p>\n
An article in the Rapport noted that Eskom expects to report a loss of R8.1 billion in the short term, which could swell to R26.5 billion in the medium term.<\/p>\n
The National Treasury described Eskom\u2019s financial problems as the single biggest risk to the South African economy and public finances.<\/p>\n
This echoed the views of finance minister Malusi Gigaba, who warned in January that Eskom\u2019s financial woes could collapse the economy.<\/p>\n
\u201cThere would be no currency, and no economy for the country if Eskom went belly-up,\u201d said Gigaba.<\/p>\n
To address the mismanagement at Eskom, Gigaba said in his budget speech that the government has strengthened Eskom\u2019s board and management with \u201chighly-capable, ethical, and credible leadership\u201d.<\/p>\n
Ratings agency Fitch warned on Friday that Eskom Holdings’ \u201cmedium-term finances are under pressure from weak demand growth and the electricity regulator\u2019s refusal to grant more substantial tariff increases”.<\/p>\n
Measures including private-sector participation to improve the utility\u2019s finances \u201cwill face significant political hurdles,\u201d the company said as reported by Bloomberg.<\/p>\n
Gigaba announced tax increases and spending cuts to narrow the fiscal deficit and curb debt in his budget on Feb. 21.<\/p>\n
The government will look to sell some of its 195,000 properties as it seeks new funding and looks to reduce government guarantees handed to state-owned enterprises, he said. Eskom is the biggest recipient of guarantees at R220.8 billion, the Treasury said.<\/p>\n
Eskom, meanwhile continues to battle allegations of corruption and mismanagement. The Sunday Times reported that former Eskom executive Matshela Koko\u2019s wife has received millions of rand from the power utility.<\/p>\n
\u201cDocuments in the possession of state capture investigators suggest the money flowed to companies where Koko\u2019s wife, Mosima, is a director,\u201d said the Sunday Times.<\/p>\n
The report stated that the money was \u201cchannelled through Eskom service provider Impulse International, where Mosima\u2019s 27-year-old daughter, Koketso Choma, was a non-executive director\u201d.<\/p>\n
In March last year, the Sunday Times reported that Koko\u2019s stepdaughter received contracts for her company worth R1 billion from Eskom.<\/p>\n