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SAICA: We are helping Eskom avoid a downgrade

Jul 30 2019 19:28
Marelise van der Merwe

Among the first items on the new Eskom Chief Restructuring Officer's to do list will be tackling the power utility's debt burden and engaging investors - and accounting body SAICA says it is standing by to assist.

In a statement, the Department of Public Enterprises (DPE) said Freeman Nomvalo – who was announced as the new CRO on Tuesday afternoon at Eskom's annual results presentation in Johannesburg – would remain the chief executive officer of the South African Institute of Chartered Accountants (SAICA).

However, he has been seconded by the SAICA board to lead a team of specialists to assist government to establish a CRO office at Eskom. He will report to the Ministers of Finance and Public Enterprises, and the Eskom board.

The project is expected to conclude in six months and will be funded by the DPE and National Treasury.

SAICA said in a statement that it had agreed to a request from the Ministers of Finance and Public Enterprises to help establish the CRO's office, adding that it would put together a team of specialists led by Nomvalo.

"The SAICA Board agreed to the request based on the importance to South Africa and its economy to avoid a possible downgrade at Eskom, which is likely to result in a sovereign downgrade if the Eskom restructuring is not urgently guided by responsible leadership," SAICA said.

SAICA had, in the past, helped government with "similar requests", it added, noting that it had assisted the Department of Higher Education and Training with resourcing finance and human resources functions to improve the efficiency of Technical and Vocational Education (TVET) colleges.

The assistance by SAICA would start with tackling debt, according to the DPE.  

"The immediate tasks for the CRO office will be to interrogate Eskom debt and various proposals to resolve Eskom’s burden and to engage investors with the Eskom Executive," it said.

The CRO office capabilities would have to include expertise on corporate finance, debt management and balance sheet optimisation, it added.

SAICA said it would aim to "reorganise the operational and funding structures of Eskom and to contribute to Eskom’s future sustainability in the interest of our country and economy".

Its programme is aimed at reorganising the operational and funding structures of Eskom with the purpose of making it profitable while, at the same time, meeting the country's energy needs.

"This project will be part of SAICA’s Nation Building initiative.

"For this purpose, a team of appropriately qualified resources will be sourced by SAICA from its membership base and elsewhere, as appropriate. The project will be led by the SAICA CEO who will spend some of his time on this project."

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