Eskom Senior Executives will not take their annual bonuses for the 2013/14 financial year, due to the parastatal’s ZAR225-billion revenue shortfall.
“Eskom’s senior executives will not take their annual bonuses, in light of the ZAR225-billion revenue shortfall experienced over the five-year period between 2013 and 2018.
“The executives at Eskom have acknowledged the financial constraints by agreeing to forgo their annual performance bonus this year as one of the efforts to cut costs,” said Collin Matjila, Eskom interim Chief Executive Officer.
In a statement on 4 June 2014, Matjila said the board had welcomed this move as the company is implementing efficiency intervention initiatives to achieve long-term financial sustainability.
In its application to the National Energy Regulator of SA (Nersa) in October 2012 for a tariff hike, Eskom asked the regulator to grant it a total 16% hike over the course of a five-year period.
The regulator approved a tariff increase of 8%, which left Eskom with a funding gap. Eskom then moved to set up a programme called the Business Productivity Programme (BPP) in 2013 to extract efficiencies within the business.
“It became necessary to rally around all our employees to deliver efficient services with less resources. We will continue to drive a conscious and concerted effort to cut waste across our business,” said Matjila.
At the beginning of Eskom’s financial year, April 2014, the Eskom Board and Executive Committee established a special joint committee that is considering a range of non-conventional sustainable funding solutions, including equity/equity-like instruments.
“While significant shifts have been made in terms of business operations to achieve internal efficiencies, the company is certain that this revenue shortfall cannot be achieved by belt tightening alone. It remains important to move towards a cost-reflective tariff urgently,” explained Matjila.
Additionally Eskom, through its shareholder ministry, the Department of Public Enterprises, is in discussions with the National Treasury to find a long-term solution.
The utility is acutely aware of its obligations and will continue to guarantee security of supply of electricity in support of economic growth.
“It is important that Eskom remains financially sustainable to enable us to keep the lights on, whilst we complete the new build programme that will ease the pressure on the national grid,” said Matjila.