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Eskom’s Financial Crisis Deepens Amid Rising Municipal Debt

By Loyd Matare

Eskom, South Africa’s power utility, has received another qualified audit for the 2023/24 financial year, raising concerns over its financial viability.

The Auditor General of South Africa (AGSA) noted that Eskom’s overall audit position had deteriorated compared to the previous year, with declines in distribution, finances, and oversight.

The AGSA reported that Eskom continues to submit statements for audit containing material misstatements, significant control deficiencies, and a breakdown of controls related to compliance with laws and regulations.

“Failure to implement consequence management encourages a culture where the disregard for legislation, policies and procedures thrives,” the AGSA said.

Eskom’s financial challenges are compounded by its dependence on government debt support and its inability to resolve its municipal debt crisis.

The utility has reported operating losses of R57 billion, with current liabilities exceeding assets by R50 billion.

Despite hopes to return to profitability in 2025, Eskom’s financial future remains uncertain.

The AGSA emphasized that Eskom’s going concern assumption is fully dependent on the ongoing positive impact of its generation recovery program.

However, with limited options to address its financial challenges, Eskom faces an uphill battle.

“The targeted savings will not be impactful or sustainable for as long as there is still a culture of non-compliance and continued struggle with irregular expenditure,” the AGSA warned.

As Eskom struggles to recover, it remains to be seen whether the utility can overcome its financial woes and return to profitability.

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