“We may require more…” says Eskom’s Maroga

17 April 2009 – Eskom CEO, Jacob Maroga, stated recently that the Eskom build programme could assist in protecting South Africa from the worst effects of the global economic crisis. This programme, which is effectively a ‘ready-made stimulus package’ includes the building of two coal-fired power stations and a pumped storage peaking plant in the Drakensberg worth a total of R205 billion (USD23 billion) over a three year period.

It is expected that the development of coal-fired power stations, Medupi, Kusile and Ingula will encourage investment in mining, transport and transmission, which will also encourage the development of communities, including necessary amenities for workers and their families.  This is in addition to the 11 00MW of generation capacity which will be added to the national grid.

Maroga cautioned however, that this expenditure would place a strain on the company’s financial ratios and there was a suggestion that Eskom may have to approach government for further financing over and above the R385 billion (US$38.5 billion) already approved in terms of subordinated loans and guarantees for their five-year capital programme.

"Government has given us a guarantee . . . but we may require more," he said.

Delays in Eskom’s application to the National Energy Regulator of South Africa lay in plans to present, not only a request for a price adjustment, but also an “integrated funding blueprint”.  The delay was also as a result of the “fundamentally” changed environment for infrastructure funding.

If Eskom decided not to seek a tariff increase for additional funding, the chances of appealing to government for more support would increase.  Either way, there was likely to be significant opposition to either consumer or taxpayer funding of additional capital for Eskom.