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Contract discrepancies forced Eskom to delay release of results

Eskom will announce its annual results this week after a three-month delay.
Image: Bloomberg

Eskom, the indebted South African state power utility, will announce its annual results this week after a three-month delay.

The company was forced to delay their publication because of over-payments related to the construction of its new Kusile power station and issues with its pension fund, people familiar with the situation said. The plant disbursements could have consequences if the contracts don’t comply with the Public Finance Management Act, which regulates spending by government entities and is designed to minimise corruption.

“Eskom experienced some delays due to the lockdown resulting in late access to sites by the auditors and the resolution of some accounting and PFMA-related matters,” the utility said in a response to queries. “Eskom intends to release the annual results by the end of October to ensure compliance with legislation and regulations.”

In July, Eskom said the results for year through March had been delayed due to the coronavirus and an associated lockdown. The utility’s results for the three previous financial years were published within four months of the year-end.

The company has struggled to properly account for spending on Kusile, said the people, who asked not to be identified as the information isn’t public. In June, Eskom estimated it had overpaid contractors working on the new plant by R4 billion ($247 million).

The budget for Kusile and Medupi, another coal-fired plant of a similar size, has ballooned to more than R450 billion from an initial amount of about a third of that. The cost overruns at the long-delayed plants have been a major contributer to Eskom amassing R488 billion in debt, which it is struggling to service.

The Eskom Provident and Pension Fund oversees the pensions of current and former employees. The utility has more than 40,000 staff.

© 2020 Bloomberg

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The last time Eskom had a board with a certain degree of capability goes back to the days of Dr John Maree, and Dr Ian McRae – only to be flushed out and a host of imperfect directors followed who ensured the ANC wrecking ball would continue to destroy the economy

This is what happens when incompetent ANC cadres and elitist few who are politically connected, are parachuted into the Executive & Board positions at SOE’s.

End of comments.

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