Eskom has gone billions of rands into the red after pouring money into keeping the lights on in South Africa, the power utility will report this week, but it is confident it can raise the funds needed for its build programme this year, and will not have to turn to the government for cash.

Business Day reported on Monday that the market expects operating losses at Eskom, which reports its financial results for the year to March on Thursday, could be as high as 6 billion rand, mainly because of the huge amounts Eskom spent to rebuild its coal stockpiles and turn around the performance of its power stations in the wake of last year’s power crisis.

To the operating losses will be added several billions of rands in paper losses on embedded derivatives related to the special pricing agreements Eskom has with aluminium and ferrochrome smelters.

Eskom CE Jacob Maroga declined last week to discuss figures.

But he said Eskom’s operating losses were better than he had budgeted for in June last year, after the National Energy Regulator of South Africa (Nersa) agreed to an additional tariff increase.

Losses were in the context that there had been no load shedding since last April.
The country said Eskom must keep the lights on. It is more important than the bottom line. Keeping the lights on is the most important bottom line for the country, Maroga said.
The release of the results has been delayed by about a month, but Maroga said there was nothing sinister about this.
Eskom had been waiting for final details of this year’s tariff decision from Nersa so it could include this in the going concern statements in its annual report.
It also needed to brief Cabinet ministers.
Maroga said Eskom was in talks with the government on a funding model for its build programme, and this would be finalised by the end of next month.
Choices would have to be made, but there was no "bail- out", and Eskom, which is receiving 60 billion rand of equity from the government over three years, had not asked the government for more cash, Maroga said.
Eskom is spending more than 385 billion rand over the next five years to build the new infrastructure it needs to meet demand and lessen the risk of further power crises, but it is still unclear what mix of tariff increases, borrowings and equity it will need to fund this - hence the talks on a funding model.