| COMPANY NEWS
|
Eskom's main challenge is staying solvent
February 12, 2009
By Jackie Cowhig
Eskom's challenge in the short term was to stay below its revenue and survive, chief executive Jacob Maroga said in an interview yesterday.
"First, we must recognise that all our major customers have been impacted by the global economic slowdown, so revenue is under stress, our customers are under stress and our tariffs were already not where we wanted them to be before the falling off in demand," said Maroga.
Eskom had to finely balance trimming its costs, in particular the cost of buying and transporting coal and holding it in stockpiles, against securing supply for power plants to avoid load shedding, he said.
The utility was reviewing and adjusting where necessary all of its costs and spending for immediate-term and longer-term plans, Maroga said.
"Costs are fairly static for us. The issue is how we can meet this challenge and fit our costs to our revenue, now and further ahead."
Last year, the government pledged to give Eskom R60 billion over three years to help meet unexpected costs such as the high price of coal.
"Projects we are already committed to - by which I mean we have signed contracts and there are supplying mines already being developed or expanded - we will prioritise funding for these.
"Other projects which are planned but not committed are under review. We haven't made announcements on these, with the exception of the proposed nuclear plant, because no decisions have been taken yet," he said.
Eskom will very soon be applying for next year's tariff increase, as an appropriate hike is needed so expansion can take place.
Maroga said: "Eskom's planned capex [capital expenditure] will have a huge positive impact on the future of economic growth. The consequences of the capex not happening as planned should also be understood.
"We expect a tariff decision will be made on a country basis: what's needed for the country's growth as a whole."
The fall in power consumption had hit Eskom's revenues but had also given the utility a little breathing space, because it had reduced the pressure of demand, Maroga said.
This fall in demand had removed the urgent need Eskom faced last January to buy short-term coal at much higher prices than under longer-term contracts. The utility is still trying to cut the cost of coal and is no longer signing contracts of less than two years, as it did last year.
The shortest contracts are five to eight years and the ideal is closer to 10 years.
"We have certainly not cancelled any coal supply contracts. We need always to optimise the price of the coal we buy, as it is a big cost element," Maroga said.
The money-saving drive extended to the potential disposal of any lingering non-core Eskom assets.
Eskom has made no decision yet on what to do with its most obvious non-core asset - its 3 million tons-a-year export share of the South Dunes coal terminal at Richards Bay.
This allocation has been pursued for years by traders such as Swiss-based trading giant Glencore. - Reuters
|
|
|
Social bookmarking allows users to save and categorise a personal collection of bookmarks and share them with others. This is different to using your own browser bookmarks which are available using the menus within your web browser.
Use the links below to share this article on the social bookmarking site of your choice.
Read more about social bookmarking at Wikipedia - Social Bookmarking
|
|
|
Company News
News
Markets
Technology News
International
|
