HomeIndustry SectorsFinance and PolicySouth Africa's Eskom may get $21 bln more govt support

South Africa’s Eskom may get $21 bln more govt support

14 September 2010 – South Africa’s power utility Eskom said on Friday it may get an additional 150 billion rand in state support to pay for new power plants and ease an electricity supply shortfall.

Financial Director Paul O’Flaherty said that while the figure has not been finalised yet, additional guarantees and a special-purpose vehicle to raise debt and recapitalise Eskom were under discussion.

"We are looking at a combination of additional guarantees for debt and a potential recapitalisation of Eskom," he said.

The Treasury last year offered Eskom loan guarantees of 175.97 billion rand over 5 years to help it raise funds to boost capacity as it struggles to meet fast-rising power demand in Africa’s biggest economy.

South Africa’s national grid nearly collapsed in early 2008, forcing mines and smelters to shut for days and costing the country billions of dollars in lost output.

Eskom has since launched an ambitious power expansion programme but still needs to raise parts of the money required.

The utility was forced to put some projects on hold due to funding shortfalls, raising concerns about security of supply in the major producer of platinum, gold and ferrochrome.

Eskom said earlier this week it aims to issue bonds in the United States and Europe this year as part of a plan to raise up to 50 billion rand over the next three years.

O’Flaherty also said that Eskom’s planned Medupi coal-fired power plant, the utility’s first new power station in two decades, might be delayed by up to three months.

The first of six units of the 4,800 megawatts plant was expected to come on stream by April 2012.