Cape Town - Eskom on Monday said it had secured just over half of its funding requirements for the current financial year, as it acknowledged it was battling a liquidity squeeze.
This came after Fin24 earlier reported that the power utility’s poor governance had left it teetering on the edge of insolvency, with only R1.2bn of liquidity reserves expected to be in hand at the end of the month.
This was based on Eskom’s latest report to its shareholder representative, Public Enterprises Minister Lynne Brown, which showed that its liquidity was fast drying up, as it struggled to raise funds in an unsympathetic market.
- READ: Eskom’s cash dries up
On Monday evening, Eskom said it had noted the media reports.
Eskom’s interim group chief executive Sean Maritz said that while the power utility’s liquidity levels were “not at the desired levels”, they were sufficient to fulfil its commitments.
Eskom said it has always maintained that the 2.2% tariff increase for the financial year 2017/2018 will present challenges to the company’s liquidity position. “As a result, Eskom has had to undertake certain financial commitments to ensure sufficient liquidity in line with its funding requirements,” it stated.
The power utility said it had, to date, secured “approximately 56%” of the funding requirements for the current financial year.
It added that the remaining funding requirement were largely dependent on it constituting a new board of directors, resolving what it termed “internal governance related matters”, filling a number of permanent executive positions, and “remedying the issues that gave rise to the qualified audit opinion on the FY17 financial result”.
“Eskom is confident that the board of directors and the executive management team with the support of the South African government will address the above-mentioned issues that have negatively impacted its liquidity. As such, Eskom will maintain sufficient liquidity to support its operational and financial requirements,” it stated.
SUBSCRIBE FOR FREE UPDATE: Get Fin24's top morning business news and opinions in your inbox.