'Unwavering support' for Eskom

Johannesburg - Electricity utility Eskom has welcomed the decision of the National Treasury to bring forward the disbursement of the R60bn deeply subordinated loan from the government.

Eskom further noted the government's willingness to consider providing guarantees to enable the organisation to access funding otherwise not available.

"Eskom welcomes the reduction of the disbursement period from the initial five years to three years, including the willingness to consider providing guarantees.

"This decision of the government gives recognition of the importance of maintaining Eskom's strong investment grade credit rating and is a clear indication of the shareholder's unwavering support in that regard", said Eskom Finance Director Bongani Nqwababa.

The government will now disburse the R60bn loan in three installments of R10bn, R30bn and R20bn in 2008/9, 2009/10 and 2010/11 respectively. This compares favourable to the initial decision to disburse over five years.

"This is an important step towards securing the long term financial sustainability of Eskom and will enhance the organisation's ability to deliver the large capital expansion programme.

"Ensuring security of supply goes hand in hand with financial sustainability. As a result, going forward it is important for the role of regulatory increases and shareholder support to be complementary and predictable in order to reassure funders and suppliers of the long term attractiveness of Eskom as a business partner", said Nqwababa.

Eskom is embarking on a large R343bn capital expansion programme over the next five years to March 2013.

Generation projects will take up 73% of the budget, with transmission investment accounting for another 13%. The rest of the budget will fund improvements on the distribution network. About R46bn rand of the total capital expenditure will be invested in the 2008/9 financial year.

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