Eskom cannot afford to expand its nuclear power capacity, Calib Cassim, acting CFO of the South African utility, said yesterday. Cassim was speaking to reporters during the release of Eskom’s financial results for the six months to 30 September 2017.
Eskom, which operates the sole nuclear power plant on the African continent, reported a 34% drop in interim profits to ZAR 6 billion ($504 million) due to declining sales and higher financing costs.
“If [we] don’t have a sustainable balance sheet now [we] can’t commit to nuclear if I have limited funds. Now the focus is on maintaining the current assets and then whether we can sustain nuclear in the future,” Cassim said, according to SA news.
Cassim said the 2.2% tariff increase energy regulator Nersa granted Eskom in the current year had led to a 30% reduction in cash from operating activities, which leaves it without enough money to pay its increasing finance cost.
Although Eskom recorded an operating profit of ZAR 6 billion, it also reported a ZAR 12 billion cash shortfall overall for the year. Cassim said a cash injection of ZAR 10 billion was needed by 1 February and another ZAR 10 billion by 27 February.
Eskom’s debt stands at ZAR 367 billion, some of which acting CEO Phakamani Hadebe said the company should consider converting into equity to reduce gearing. Eskom has secured 54% of funding for the 2017/18 financial year, he said.
“We need further engagement with investors and funders. We need to build credibility [which is] something that is earned. We need to enhance our operational efficiencies,” Hadebe said, adding he is confident the utility “can turn the corner and that the challenges at Eskom “are less about core operational issues”.
Eskom’s two-unit Koeberg plant, which has a net generating capacity of 1830 MWe, generates around 5% of South Africa’s electricity.
South Africa’s Integrated Resource Plan for 2010-2030 calls for construction of 9600 MWe of new nuclear capacity – supplying 23% of the country’s electricity – with the first reactor to come on line by 2023.
In December 2015, Eskom issued a request for information to companies interested in participating in the programme, but the South African High Court last year ruled ministerial determinations underpinning the country’s nuclear procurement plans to be unlawful and unconstitutional. It also declared the same to be the case for intergovernmental nuclear cooperation agreements, including those with Russia, South Korea and the USA, and ruled that they and the request for information must be set aside.
In October, the Department of Environmental Affairs authorised Eskom’s Final Environmental Impact Report for a new nuclear power plant at Duynefontein – next to the existing Koeberg plant. However, amid allegations of impropriety or corruption, state-owned Eskom has lost five executives and senior officials in the last week and its credit rating was downgraded to junk status by ratings agency Moody’s last weekend.
This article was researched and written by World Nuclear News
