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Eskom Holdings SOC Ltd’s first-half profit plunged 89% and the situation at the South African state-owned power utility is likely to worsen in the next six months, chairman Jabu Mabuza said.

Profit plunged to R671 million ($48 million) in the six months through September from R6.3 billion a year earlier, while finance costs rose to R15.2 billion from R11.9 billion, the company said in a presentation in Johannesburg on Wednesday.

The company’s debt burden is “impossibly high,” Mabuza said, even as it reported improved liquidity and announced that 73% of funding for 2018-19 is secured. “We’re not selling enough electricity” to recover costs, he said, saying sales volumes dropped 0.8% in the period.

“Eskom is in a state of severe financial difficulty.”

Eskom is struggling with high debt and declining demand as it takes steps to emerge from multiple scandals involving graft and mismanagement. In the meantime, the threat of blackouts looms, which would add pressure on the economy that plunged into a recession earlier this year.

The utility has experienced low coal stocks, and costs for the fuel rose by 7% during the first half. Power from independent producers increased 29%, mainly due to volumes being higher. A higher-than-planned wage settlement earlier this year is weighing on the balance sheet, it said.

Acting chief financial offer Calib Cassim was appointed to the role on a permanent basis.


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