Eskom’s catastrophic 800% increase in losses shows that things are going from bad to worse
30 July 2019
The Democratic Alliance (DA) notes with concern the R20.7 billion loss Eskom has posted for the 2018/19 financial year. This follows from a loss of R2.3 billion in the 2017/2018 financial year. This pattern outlines an increase in financial losses of about 800% from the previous financial year. This is in no doubt the result of years of corruption and mismanagement, leaving Eskom in its worst financial state in history.
Other worrying trends include the increase in municipal debt from R13.6 billion to R19.9 billion. Clearly, things are going from bad to worse at the utility.
Eskom is a sinking ship, and judging from Public Enterprises Minister, Pravin Gordhan’s announcement on Monday that the entity would appoint its current board Chairperson, Jabu Mabuza, as an interim Acting CEO, there is no permanent captain to steer the ship through this storm.
Given the fact that Eskom finds itself sinking financially, we cannot afford any form of board instability. The appointment of Mabuza as acting CEO will only bring his independence into question as the board’s primary responsibility is to hold the executive to account and perform proper oversight.
Placing the responsibilities of two critical positions on one individual is a mammoth task and undoubtedly sets a person up for failure. This decision violates any attempt to establish good governance practices at Eskom.
The DA calls on Minister Gordhan to ensure the speedy appointment of a permanent CEO. The current instability does not bode well for investor confidence or Eskom’s financial well-being.
Eskom’s financial trajectory is not sustainable. South Africa cannot afford a recurrence of load shedding, as we stare down the slow collapse of the entity. This will have irreparable consequences for the economy and ordinary citizens.
The utility will require expert leadership to take control. We have seen this scenario of interim appointments play out time and again at state owned entities (SOEs), which only leads to uncertainty and instability. This is exactly what Eskom, and our national economy does not need.
The DA has an alternative plan to save and stabilise Eskom to secure South Africa’s power supply, through our Cheaper Energy Bill, which seeks to break Eskom into two separate entities – a generation entity which is privatized and a transmission/distribution entity. This would reduce the cost of electricity, bring about much-needed competition and ensure that South Africa is not being forced to pay for the corruption and mismanagement which has taken place at Eskom.
The DA will continue to fight for an efficient and transparent Eskom, and we will continue to fight for the sustainability of our electricity supply. South Africans deserve reliable energy to the economy to empower people to grow the economy and create jobs for the millions of unemployed South Africans.
Issued by Natasha Mazzone, DA Shadow Minister of Public Enterprises, 30 July 2019
