Dear President Ramaphosa, is Eskom insolvent?

The UIM and several other organisations, including energy specialist, David Lipshitz, CIP leader Jack Miller, CCC leader Fadiel Adams, ULA leader Hein Marx and Dr Michael Louis, chairman of the Independent Candidate Association, have issued a combined letter to President Cyril Ramaphosa.

The content of the letter, specifically, directly questioned the president on critical issues relating to the solvency of Eskom – and indeed if it is a sustainable growing concern.

Below is the letter in its entirety:

Dear President Ramaphosa:

We write to you, as representatives of the citizens of this country, to ask you to provide clarity on the questions raised below.

Answers to these questions will provide the South African public, and all relevant and interested parties, with the information required to be able to make informed decisions on how to proceed, and thereby to be able to assist with providing solutions to bring an end to the energy crisis, which has been crippling South Africa’s economy with ever increasing severity since 2007.

Therefore, accurate answers to these questions are a matter of national security and urgent in nature, so as to ensure that the safety and welfare of South African citizens, businesses, the economy and society at large are rescued from the widespread destruction caused by rolling blackouts, or “load shedding”, without delay.

As this relates, we would like to direct your attention to an extract from ESKOM’s 2022 Annual Financial Statements (the extract from the “Independent Auditor’s Report to Parliament on Eskom Holdings SOC Ltd and its Subsidiaries” which can be found on page 31 of the document under the heading, “Material Uncertainty Related To Going Concern”):

“The mitigating strategies and actions as disclosed in note 3.2 are numerous but various dependencies and uncertainties both internal and external to the company will impact the ability to deliver against these strategies, which indicates the existence of a material uncertainty that may cast significant doubt on the group and company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.”

We trust that you will agree that it is deeply concerning that registered independent auditors Deloitte & Touche have found “material uncertainty that may cast significant doubt on the group and company’s ability to continue as a going concern”.

After analysing the financial statements of Eskom and taking the above into account, we hereby request your answers to the following questions:

1. Is Eskom solvent?

2. What is the result of an acid-test ratio calculation with regards to Eskom’s 2022 annual financial statements?

3. Is Eskom a going concern?

In addition to the above, Deloitte and Touche also claimed to have found that Eskom breached the National Environment Management Act 107 of 1998, and that due to a backlog of forensic cases, “management was not meeting the requirements of the National Treasury Regulations”.

Based on this, we also kindly request answers to the following:

4. Has Eskom breached the National Environment Management Act 107 of 1998?

5. Has Eskom met the requirements and expectations set out in the National Treasury Regulations for financial year ending 31 March 2022?

As the South African government has often reassured the people of South Africa as to the acute attention with which it has applied itself to this problem, and its full dedication to resolving this issue, we trust that all of the relevant information pertaining to this crisis would be readily available upon request.

However, in order to allow for all possible attention to thorough detail, we hereby kindly request that the information and answers to the above questions be provided within 14 days of this letter, or by no later than 29 March 2023.

As this issue is of such importance to South Africa as a country, its economy, and the welfare and safety of all of its citizens, we would like to thank you and your executive office for your time and consideration on this matter.

Sincerely, the Energy Coalition

Neil De Beer, UIM president, said “The fact of the matter, is that citizens of SA must be informed if Eskom is solvent and if it is a growing concern, worthy of continued tax bailouts from tax payers”.

“This information is vital to understand the financial position, pertaining to audits and possible transgressions, and breaching of laws by Eskom.”

Speaking directly to “BR”, De Beer said that “President Ramaphosa has to answer these questions and he has 10 days to inform the nation”.

“If he does not answer we will ask the matter to be put into parliamentary questions to him”.

De Beer made a great comparison between South African Airways (SAA) and Eskom. He says that the government will do with Eskom exactly what it did with SAA. The state will place the entity in business rescue and then sell off the utility slowly and deliberately to political allies.

This is a developing story...

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