'Eskom in most challenging position in living memory'

The utility says the power grid will remain tight through the rest of summer.

FILE: Eskom delivered its interim results for 2014 in Johannesburg on 25 November. Picture: EWN.

JOHANNESBURG - Eskom has urged South Africans to work with it as it battles financial constraints, fuel shortages and operational problems.

The parastatal earlier delivered its interim results for 2014 in Johannesburg, which shows a bleak picture for the future of electricity supply.

Eskom says with warnings of more rolling blackouts, the utility is now in its most challenging position in living memory.

Eskom instituted rolling blackouts for the third time this year at the weekend as fuel reserves ran out, forcing it to call on industrial customers to cut their consumption by 10 percent.

The utility says the power grid will remain tight through the rest of summer, warning South Africans may have to deal with rolling blackouts until March next year.

Eskom Chief Executive Officer Tshediso Matona said, "Unless a miracle happens we will stay in this situation until we can bring more capacity and that won't happen overnight."

Matona said the parastatal's financial position is systematically deteriorating due to rising primary energy costs including diesel and coal.

"Our financial health has been deteriorating in recent years. The support package recently announced by government will go a long way towards easing our liquidity. For the period ahead, we will be living on edge. Eskom has kept the lights on for the longest time ever, even when the company could not bear it."

Matona said the parastatal is facing a number of challenges.

"Operational challenges are the leading problem at Eskom."

He said Eskom cannot meet the current high demand.

"We are seeing increasing demand and unplanned power outages."

The first unit of Eskom's Medupi power plant is still on track to come online in December but the project is almost two years delayed.

The government said last month it would inject R20 billions of cash into the struggling utility and said it could also convert its existing R60 billion subordinated loan to equity.

Even with the cash injection and permission to raise electricity tariffs granted by the energy regulator, Eskom said its "financial health is under strain".

Eskom's net profit fell 24 percent to 9.3 billion rand in the six months to end-September, and it forecast a 93 percent decline in full-year net profit to R500 million.

Ratings agencies Standard & Poor, Fitch and Moody's recently downgraded Eskom and chief financial director Tsholofelo Molefe said that "any further downgrade would seriously impede Eskom's ability to raise external funding".