South Africa’s embattled power company Eskom on Tuesday reported a record net loss of R20.7 billion for the year to March, nearly 10 times more than in the previous 12 months.
The state power utility’s loss widened from R2.3 billion the year before primarily because of lower sales, increased finance costs and higher costs for primary energy, in particular coal.
Eskom, which generates around 95 per cent of the country’s electricity, has accumulated $30 billion of debt despite being the recipient of multiple bailouts from the government.
A week ago, the government announced a R59 billion bailout for the power supplier, a mere five months after an even bigger cash injection was announced over the next three years.
“Today Eskom releases results that, while expected, are unfavourable,” chairman and acting CEO Jabu Mabuza said at the company’s offices in Johannesburg.
“The organisation disappointingly incurred a net loss after tax of R20.7 billion for the year,” Mabuza said.
Mabuza was on Monday announced as the acting CEO until October following the sudden resignation of Phakamani Hadebe in May, citing “unimaginable demands” of the job.
Hadebe became the tenth CEO to step down over the past decade.
The latest bailout was slammed by global credit ratings agencies, who fear for South Africa’s debt to GDP ratio and its fiscal leeway.
Moody’s said the government would struggle to absorb the costs and subsequently labelled funding for the embattled power utility as “credit negative”.
Eskom has been damaged by years of corruption, mismanagement and over-spending.
Outgoing CEO Hadebe said Eskom’s funds were not even enough to keep up with interest on its debt, let alone pay it off.
“We are like an individual who borrows money to pay interest on their credit card,” Hadebe said.
State-owned companies were at the centre of corruption scandals under ex-President Zuma, with power-supplier Eskom now laden with huge debts.
It imposed a period of rotational power rationing in February, plunging offices, factories and homes into darkness for long hours and sparking public anger at the ANC government.
President Cyril Ramaphosa has vowed to reform Eskom calling it “too vital” to the economy to be allowed to fail.