NEWS

Eskom On The Verge Of Insolvency

Eskom's liquidity reserves are reportedly drying up.

13/11/2017 07:30 SAST | Updated 13/11/2017 07:30 SAST
Mike Hutchings / Reuters
Pylons carry electricity from a substation of state power utility Eskom outside Cape Town in this picture taken March 20, 2016.

Eskom is on the verge of insolvency, with only R1.2-billion of liquidity reserves left, Fin24 reported on Monday.

This is according to its latest report to Public Enterprises Minister Lynne Brown, which reportedly showed that Eskom's liquidity is fast diminishing. The report reportedly says that governance issues are negatively affecting Eskom's ability to operate.

At the end of November, Eskom will reportedly have only R1.2-billion left, with a target of R20-billion. Eskom is reportedly expected to have a negative liquidity position by the end of January next year.

Eskom says it will have to reduce its short-term expenditure by up to R10-billion.

Issues around governance and investigations need to be resolved, and stability needs to be returned to Eskom's board and executive management if the situation is to be remedied, the report states.

And investors will not commit to funding Eskom if these issues are not solved.

Parliament is currently conducting an inquiry into state capture at the power utility. Last week, it heard shocking accounts of how a senior official was called into a meeting with one of the Gupta brothers and told to ensure that a sensitive case against former Eskom CEO Brian Molefe was only heard after the ANC's elective conference in December.

Suspended chief financial officer Anoj Singh and suspended CEO Matshela Koko are both under investigation for their role in state capture.

Eskom spokesperson Khulu Phasiwe told Fin24 that investors had told Eskom that it was vital that the parliamentary inquiry get to the bottom of the allegations.

"Once in the open, a way forward can be paved for addressing the issues and potential future investment," Phasiwe reportedly said.