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Eskom has concluded a credit facility valued at R15 billion ($1.1 billion) with a consortium of local and international banks.

The government guaranteed facility will form part of the financing of the South African state-owned power utility’s current capital expenditure programme.

“We have made significant progress in transitioning the business and securing funding. We are pleased that lenders have elected to continue partnering with Eskom on our journey to complete the capital expansion programme for the benefit of South Africa’s economy," explained Phakamani Hadebe, Eskom’s group chief executive, in a company statement.

"It is also encouraging to see that financial markets continue to view Eskom in a positive light; as we progress towards financial and operational sustainability,” he added.

Andre Pillay, general manager at Treasury, said: “The conclusion of this facility will ensure that Eskom’s liquidity requirements are timeously fulfilled. To date we have raised and secured approximately 95% of the R72 billion funding requirement for FY18/19; the remaining 5% will be raised through various funding sources including domestic debt capital markets.'

"The stable liquidity position places us in a position to focus on securing funding for the next financial year (FY19/20 of which 30% has already been secured).”

Unbundling the utility on the cards

In order to secure the financial future of the utility, the thinking is that the activities of generation and distribution ought to be shared with the private sector whilst Eskom would continue to manage the transmission of electricity. “It’s one of those critical issues. We would hope it is addressed,” said Baxter when asked whether President Cyril Ramaphosa ought to tackle the issue.

“Having a plan on the table is critically important. Rating agencies are looking for clear direction, but we also have to acknowledge that restructuring ESI (the electricity supply industries) is a five to 10-year process,” he said.

Speculation is rife that Ramaphosa might allude to possible privatisation and unbundling Eskom in the State of the Nation Address due to take place on 7 February. Read more: Will Ramaphosa’s SONA unbundle Eskom?

In January, the president had told delegates at Davos that: “We are currently developing a response to the financial and operational crisis at the country’s electricity utility, Eskom. In the next few weeks, we will be announcing a set of measures to stabilise and improve the company’s financial position and to ensure uninterrupted energy supply”.

BusinessLive citied public enterprises minister, Pravin Gordhan as saying that Eskom’s future would be decided within the month. “Should we unbundle Eskom into three entities as is the practice worldwide?”

“We are going to have that debate soon and move beyond debate if we are to have Eskom as a credible entity both financially and operationally in a month’s time,” Gordhan told Business Unity South Africa’s economic indaba in Midrand.