Eskom to post record loss but no update on Transnet’s financial predicament

ESKOM, South Africa’s government-owned power utility, is expected to report a R21.2bn loss for its 2022/23 financial year, said News24 citing disclosures by the National Treasury in Parliament today.

It will be the utility’s largest ever loss and comes despite a 9.61% increase in tariffs and a R21.9bn capital injection from the National Treasury. The cost of debt, a reduction in users, and inflation of imported goods, specifically diesel, were the main culprits for the loss, the publication said.

This was contained in a presentation by the National Treasury of preliminary outcomes for state-owned enterprises and government departments for the fourth quarter of 2022/23 to Parliament’s Standing Committee on Appropriations.

The presentation gave no update on the financial position of Transnet, government’s rail and ports company. However Transnet will submit an independent review of all its freight corridors and port operations which is a condition of R5.8bn it received in a bailout from the National Treasury, said News24.

Transnet’s lenders rolled over debt covenants at the end of last year. In the normal course of events, this is a conditional agreement turning on performance. Lenders are entitled to apply sanctions in the event conditions are not met.

Anecdotal evidence is that Transnet Freight Rail, Transnet’s largest operating unit, has had a poor start to the calendar year. For instance, annualised coal deliveries to Richards Bay after the first five months of the year are said to be below last year’s record low of 50 million tons.