OWN CORRESPONDENT, Johannesburg | Friday
SOUTH Africa’s state-owned power utility Eskom has unveiled a 51% jump in 2000 pre-tax profits and said it would diversify into the telecommunications and information technology (IT) market.
Net profit before tax surged to R3.33bn ($414.2m) in the 12 months to March 31, 2001, from 1.87 billion the year before, on improved operating efficiency. Total revenue rose to R23.57bn from R21.57bn previously.
”Strict financial management and controls, together with ongoing attention to efficiency and productivity improvements contributed to good performance,” chief executive Thulani Gcabashe said in a statement.
Gcabashe said Eskom – the world’s fifth largest power utility in terms of capacity – would broaden its focus and tap into the IT and telecommunications market.
Eskom is one of the four assets lined up by the government for restructuring and partial privatisation by 2004. The other three are defence group Denel, telecoms utility Telkom and transport group Transnet.
The foray into the IT and telecoms market is in line with the government’s vision to consolidate the telecoms divisions of Eskom, Transnet and Denel into a single legal entity to compete for the second national telephone line operator licence.
Analysts applauded the results and said they might persuade the government to rethink an earlier decision not to put the power utility on the market until the majority of rural communities have been connected to the national grid.
”It’s getting more and more attractive for investors. What the government said in August about turning around its assets to make them attractive for sale is now falling into place,” said Colen Garrow, an economist at ABN Amro.
The government currently does not plan to privatise Eskom but will introduce competition through the establishment of regulated electricity distributors by September this year.
Eskom became a tax payer from January 1, 2000. Although no tax would be payable for the next few years because of tax allowances, provisions were made for deferred tax amounting to R1.45bn.
”What Eskom needs is to maintain the high levels of profitability and some guarantee of life in a totally regulated environment for privatisation to work,” said Tony Twine, an economist at Econometrix.
During 2000 electricity sales rose 2.8% to 178 192 gigawatt-hours mainly on the commissioning of the Mozal smelter in Mozambique. – Reuters