Fani Zulu,
23 April 2009 – A senior investment officer for the Netherlands Development Finance Co, Bernard Westerouen van Meeteren, stated that Eskom should consider selling power plants in order to find their R385 billion (USD 43 billion) expansion programme. Eskom could then buy the energy back under a long-term power purchase agreement.

Buying an operating plant eliminates the risk of building costs running over budget or that revenue will not be met.  “The new owner knows exactly what plant he’s getting, so there’s less risk involved, so there’s less risk premium,” van Meeteren said in Johannesburg this week.

Eskom spokesperson, Fani Zulu, stated that this decision to sell core assets would be for government to make

South Africa has experienced numerous power cuts in recent years as a result of an energy deficiency. Eskom is currently building new plants to overcome this shortage, which has impacted largely on South Africa’s economy.   Eskom, South Africa’s only utility, produces 95% of the electricity used in South Africa but borrowing is “very difficult” as capital markets are tight. Eskom CEO, Jacob Maroga stated at a recent conference that the utility’s credit rating is under threat and that the utility would have to raise electricity prices considerably to finance the expansion.