The financial stability of South Africa’s state power utility is still in a delicate state, even with the recent improvement in electricity supply, as noted by the country’s auditor-general.
Eskim Holdings has successfully avoided power outages for 10 months, which have historically hampered economic growth. The focus is now on boosting its renewable energy capabilities. However, the auditor-general pointed out significant challenges that still need to be addressed, including cutting costs and recovering overdue payments from municipalities, during a presentation to legislators.
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Eskom achieved fewer than 43% of its performance objectives in the financial year ending March 2024, falling short of its aim to save R22.4 billion ($1.2 billion), according to the auditor-general’s findings. “Both current and prior audits show that Eskom does not have sufficient systems, processes, and controls in place to accurately measure irregular expenditures, as well as wasteful and fruitless spending and losses resulting from criminal activities.”
The utility’s plan to increase revenue relies on its ability to improve operational efficiency and the regulator’s decisions regarding permitted electricity rate hikes. It was noted in the presentation that elevated, cost-reflective tariffs could result in an increase in illegal electricity connections and voucher distributions.
The National Energy Regulator of South Africa is scheduled to announce its decision on the tariffs Eskom can impose for the next three financial years on January 30.
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The outstanding municipal debt owed to Eskom, which surpasses 95 billion rand, remains one of the greatest threats to the utility’s sustainability, following debt-service expenses, according to the auditor-general, who highlighted the stagnation in addressing prior audit issues. “Audit results demonstrate little progress in enacting the recommendations offered by auditors over the years to resolve the fundamental issues at hand.”
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