On Friday, the 97-year-old state-backed South African power and utility company Eskom Co., headquartered in Sunninghill, Sandton, said in a statement that the electricity public utility company had narrowed its net losses down to $1.3 billion or 20.5 billion South African Rand over the past fiscal year that ended on March 2020, though the utility company employing over 46,000 workers as of December 2019, had cautioned of a larger net loss this year, mostly due to the pandemic outbreak’s fiscal consequences.
Nonetheless, the state-backed utility company’s net debt rose to 484 billion South African Rand, equal to roughly 9 per cent of the continent’s most industrialized economy’s Gross Domestic Product (GDP), from an earlier reading of 441 billion South African Rand registered in the March of 2019.
Debt-strapped Eskom narrows down losses, but cautions of pandemic-led setbacks
In point of fact, the Government-owned public electricity provider Eskom has been struggling to power the highly industrialized African economy lately in part due to years of abuse and mismanagements, though an improvement at its financial performance last year appeared to be stemmed off a hike in average electricity prices which in effect had lifted the company’s annual revenue.
Nonetheless, the gains in revenues scored last year were largely offset by a higher coal price alongside debt-service expenses. Meanwhile, as major rating agencies were quoted saying following Friday’s Eskom announcement that the South African utility company’s mass-scale debt-load and a persistent decline in revenues, would eventually place the country’s entire economy at stake, several analysts and economists were quoted saying that the company would more likely to meet with an economic recession this year that might hurt the company’s electricity sales and lead to an additional loss of up to 26.2 billion South African Rand.
On top of that, addressing to the utility company’s extent of debt-load, Eskom CFO (Chief Financial Officer) Calib Cassim said late on Friday that the company’s gross interest costs were now the utility giant’s second-largest spending after coal costs, while the company’s gross interest costs had also surpassed its core capital investments.