Eskom expected to confirm R30 bn in irregular expenditure
Embattled SOE, Eskom, is set to release its Annual Results
for the previous financial year on Monday – and consumers have been warned to
brace for the worst.
Partner in Mining & Energy Advisory and Energy Expert Coalition (EECO) contributor, Ted Blom says Eskom has already indicated to the Johannesburg Stock Exchange that the announcement will include the massive irregular expenditure.
“They have a number of skeletons in their closet and they have warned investors of the upcoming announcement. Now it’s just guessing which one of the skeletons they are going to reveal tomorrow,” says Blom.
He anticipates that Eskom will confirm the approximately R30bn in derivative losses emanating from the Gupta capture of Eskom treasury.
Blom says despite the change in leadership in February, no political party appears to have the guts to tackle the “monster which has directly crippled the SA economy by inducing hundreds of business closures and the many consequential job losses.”
He has identified the 10 possible scenarios announced by the power utility tomorrow:
Skeletons that still remain in Eskom's cupboard and which may surface in Monday's results are:
1 The approximately R30bn in derivative losses emanating from the Gupta capture of Eskom treasury;
2 The approximately R50bn in Contractors claims on capital build;
3 The approximately R500bn in asset overvaluation directly attributable to the high tariff regime currently prevailing;
4 The overvalued coal stocks and continuing corruption in coal procurement of around R8bn pa;
5 The overstaffing and capitalised salaries relating to the 30 000 overstaffed employees (although Blom expects several thousand of these to be "ghost workers");
6 Continuation of the questionable Eskom phantom bonus scheme which milks millions of rands annually in favour of already over remunerated senior employees);
7 Further breakdowns in plant availability due to poor maintenance and poor quality coal (including Kusile);
8 Inflated coal costs resulting from road transport costs from Medupi;
9 Increasing burden on Eskom as a direct consequence of corruption;
10 Questionable contracts on renewables which force the utility to pay for electricity at a higher rate than Eskom's costs and which decimate Eskom's sales (and ability to service debt).
Blom adds if one of these scenarios is announced on Monday, it will immediately mean that Eskom may have to increase its prices by up to 30% in the next financial year.
“In the ensuing two financial years, I am anticipating further electricity increases by 50% and 30% for the last of a three-year old period.”
Blom calls on Public Enterprises Minister Pravin Gordhan to immediately intervene.