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Parliamentary committee pleased with new Eskom board, concerned about liquidity

Cape Town - The Portfolio Committee on Public Enterprises says it is encouraged by the decisions the new Eskom board is taking, but is still concerned about the power utility’s liquidity.

The committee met with the new Eskom board in Johannesburg on Thursday in order to establish a working relationship to ensure the viability of the company.

The board assured the committee that it was dealing with governance challenges. “The resignations and suspensions of senior managers that oversaw the decline at the company attest to the urgency that the board and the acting group chief executive officer have placed in dealing with these challenges,” said the committee.   

Since the new board was appointed, Anoj Singh resigned as chief financial officer, and Prish Govender resigned as acting head of group capital.

Chief information officer Sean Maritz was recently placed on suspension pending an investigation into allegations of impropriety. Fin24 previously reported that Maritz signed off on a questionable R400m payment from Eskom to a Hong Kong bank account. The R400m payment was allegedly made to secure a ($2bn) R25bn loan from China's Huarong Energy Africa to build or refurbish power stations in 2017.

Eskom also suspended group head of generation Matshela Koko on Wednesday. Four charges have been laid against him, including one that he misled Parliament when he appeared before the portfolio committee for the Eskom Inquiry.

Koko is challenging the suspension. He has also not responded to calls for him to resign from his position, as Singh and Govender did theirs.

The portfolio committee also shared its concern about the liquidity challenges, but is hopeful that investors will recognise the work being done by the new board and new senior management.

It raised concern over the R20bn in arrears which municipalities owe Eskom. The committee intends to engage with the portfolio committee on cooperative governance and traditional affairs to find solutions.

At a briefing in Parliament this week, Public Enterprises Minister Lynne Brown noted ratings agency Moody’s decision to downgrade the utility. The ratings agency cited the power utility’s deteriorating liquidity position and the ability of government to provide direct support.

“We remain resolute in efforts to turn the company around. There are investors and lenders reviving their engagements and commitments to the company,” said Brown.

But on Wednesday, Fitch also downgraded the company, citing its weakening liquidity and the company’s uncertain capacity to fulfill its short-term financial commitments.

"We take note of the decision by Fitch to downgrade Eskom’s credit rating. We firmly believe that the measures being implemented to turn the company around are yielding favourable results," CEO Phakamani Hadebe said in a statement.

"We have seen renewed enthusiasm from financial markets to support Eskom’s funding plan and the preliminary engagements with market participants have had positive outcomes.”

The portfolio committee also assured its support for the new board to turn around the power utility to ensure it is a sustainable company, given its strategic importance to the economy.

“The committee is convinced that the new leadership at the institution is steering Eskom in the right direction that will ensure the future viability of the company,” the committee said. 





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