Busa calls for meeting of National Stakeholders Advisory Council

Friday, August 28, 2009

Pretoria - Business Unit South Africa (Busa) has called for an urgent meeting of the President's National Stakeholders Advisory Council to discuss the large financial loss recorded by Eskom in the last year.

The power utility recorded an operating loss of nearly R3.2 billion and a total loss of over R9 billion on Thursday.

Busa said it was deeply concerned at the magnitude of the financial loss sustained by Eskom, saying that such losses were not sustainable.

"This could have serious consequences for security of electricity supply in South Africa. In order to facilitate greater transparency and consultation about the Eskom crisis Busa calls for an urgent meeting of the President's National Stakeholders Advisory Council on electricity to review the situation and discuss way ahead," said Busa.

It explained that the size of the loss had clear implications for the "mix" of tariff increases, loan financing and additional state funding which will now be necessary to provide sustainability.

"The full burden of Eskom's future funding cannot be placed on higher tariffs alone, as it is clear from recent Consumer Price Index data that electricity costs are playing a major role in preventing inflation from falling faster."

It said this was keeping interest rates higher than they otherwise need be and this should be balanced against Eskom's funding needs.

Chief Executive Officer Jacob Maroga said Eskom had embarked on a huge expansion programme in the previous year as the power utility worked around the clock to keep the lights burning and ensuring a lasting recovery of South Africa's power system.

"For this to happen we needed to spend money," Mr Maroga said, adding that this had come at a cost to Eskom's bottom line.

Eskom Holdings Chairman Bobby Godsell said as the financial results indicate, the operation recovery plan applied by Eskom came at a high financial cost.

He said 44 million tones of additional coal were purchased while power stations were operated at well above design levels.

"Each of these actions was both necessary and appropriate in the context of the supply crisis of the first half of 2008. It is, however, very clear to the board of Eskom that loss, of the magnitude we report today, are clearly unsustainable," Mr Godsell said.

Eskom spent R30 billion on its new power station building programme, compared to R18 billion the previous year. But Mr Godsell said the utility wanted to save R22 billion in the current financial year.

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