Business done Africa style. If one does not want to release the financial results, hey, just don't. Taxpayers have no rights here. Just kak en betaal.
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Johannesburg — The numbers, as one finance director says, are the numbers. Wishing them away won't change them. Nor will delaying their release make them look any better. In fact, it will probably make them seem even worse.
Eskom was supposed to release its year-end results on Thursday. But early last week it admitted that it had postponed them "indefinitely".
Eskom was supposed to release its year-end results on Thursday. But early last week it admitted that it had postponed them "indefinitely". This is not good. It will do nothing for Eskom's reputation in the market, especially at a time when the electricity utility has to raise very large amounts of cash from bond market investors. This is not the time for it to be raising questions about its transparency or its willingness to communicate with investors and the public at large.
More than that, however, the delay just serves to rouse suspicion that Eskom's financial position may be far worse than anyone expected. We already know it is going to be in the red for the latest financial year, to end-March. Eskom had said a year ago that it expected to make a loss of at least R3bn for the year. But chances are that the loss has turned out to be a multiple of that figure.
One reason deep losses are likely is the escalation in costs. Eskom's rather sketchy tariff application to the National Energy Regulator detailed some sharp increases in the costs of coal, in particular, and diesel. After last year's power crisis, Eskom had to go into the market to buy very large quantities of coal to rebuild the stockpiles that it had allowed to fall to dangerously low levels. It did much of that at a time when coal prices were high, and the short-term coal contracts it had to sign must have come at very high cost. Logistics costs are high too given the state of the roads around the power stations.
Eskom would also have made losses on its embedded derivatives, which relate to the commodity related pricing contracts that it entered into long ago with the aluminium smelters at Richards Bay and in Mozambique. And added to all that is that when demand for its electricity dropped sharply from late last year, when exports crashed and the economy went into recession, it must have hit Eskom's revenues hard. How hard we don't know. But until Eskom tells us, we can only imagine the worst.