The CFO says the unbundling won't be cheap and the costs are yet to be determined.
In an interview with EE Publisher, Eskom’s chief financial officer Calib Cassim revealed that he believes Eskom’s issues won’t be resolved with President Cyril Ramaphosa’s proposed unbundling alone.
Calib has served as the acting chief financial officer of Eskom from July 2017 following the resignation in disgrace of former CFO Anoj Singh. He was appointed permanently in November 2018.
He said that while he supports Ramaphosa’s plan to unbundle Eskom into three separate entities, this solution will not resolve the company’s issues. He highlighted that the unbundling won’t be cheap and that the costs haven’t even been determined yet.
He explained that if Eskom goes down, it will “bring down the sovereign and the economy”. “(Ramaphosa) used the words ‘financial crisis’ in his state-of-the-nation address, and this is the best way to describe where we are, hand-in-hand with our operational challenges.”
He detailed the factors contributing to the current Eskom crisis. These include the fact that the company’s generation performance has led to the group’s loss extending from R15 billion to R20 billion. Despite the clawback already granted by Nersa, Eskom needs R200 billion in revenue a year.
“We’re using one credit card to pay back the other credit card,” Cassim said.
Government will reveal the extent of funds that it will commit to Eskom in the budget speech next week.
Calib believes that Eskom has no choice but to cut jobs, despite union disapproval.
“With regard to staff costs, we acknowledge that we have to address this. We’ve started by giving no bonuses or salary increases to senior managers, while for middle-managers there was just an inflationary salary adjustment with no bonuses.”
According to Eskom chairman Jabu Mabuza, the company has 33 percent more people than it needs.
“We need to look to reduce this over the next three to five years to come in line with an efficient base,” Calib said.
However, Eskom’s moves to reduce its costly workforce has brought on conflict with unions such as the National Union of Mineworkers (NUM) and the National Union of Metalworkers (Numsa).
Unions have also announced plans for a strike against the president’s plans to unbundle Eskom. Numsa says that this is an attempt to privatise the power utility “through the back door”. It said it will take action against the move because it will lead to job losses and higher prices.
The union said that Eskom’s unbundling will lead to 50,000 jobs being lost.
Looking forward, Calib suggests engaging with the union leaderships to ensure they understand the situation, and that everyone has to contribute in taking some of the pain to balance the equation.