De Ruyter: Eskom needed cost-reflective tariff to prevent further govt bailouts

Eskom CEO Andre de Ruyter said that the power utility had turned an operating profit of R5.8 billion in spite of a challenging year.

Eskom CEO Andre de Ruyter. Picture: @Eskom_SA/Twitter

CAPE TOWN - Eskom’s R400 billion debt mountain is smaller than it was, but it continues to drag down the power utility’s performance.

Eskom released its financial results for the year ending March 2021 on Tuesday afternoon, posting a net loss, after tax, of nearly R19 billion. But CEO, Andre de Ruyter, said that Eskom was also able to cut its debt by just under R82 billion and managed cost savings of R14.4 billion against a target of R14.1 billion.

De Ruyter said that the net after-tax loss of R18.9 billion was largely due to the massive debt that Eskom continued to carry, and which he said was unsustainable. The cost of servicing Eskom’s debt came in at R31.5 billion for the financial year ending March 2021.

He said that Eskom turned an operating profit of R5.8 billion in spite of a challenging year.

“We were able to reduce our debt by some R81.9 billion – some of that is due to government chipping in with support of R56 billion but also due to a strengthening in the rand, which played a role in the conversion of our dollar and Euro-denominated debt into rand but also thanks to some very prudent cost-savings measures that management was able to implement.”

Revenue growth improved to R204.3 billion, thanks to an 8.76% tariff increase.

De Ruyter said that Eskom needed a cost-reflective tariff to prevent the need for further government bailouts.

The COVID-19 pandemic dragged Eskom’s sales volumes down by 6.7%. Municipal debt continued to spiral and currently stood at R39 billion – almost 10% of Eskom’s debt burden.

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