Govt to guarantee Eskom debt?
2008-09-10 07:00
Special Report
Eskom is set to seek a 34% hike in electricity tariffs, back from the 88% rise it had been considering due to the global economic slowdown, a newspaper says.
Cape Town - The government is considering providing guarantees to Eskom to enable it to borrow funds for its expansion
plans, according to Alec Erwin, the public enterprises minister. He also told a questioner in parliament that the costs of the expansion programme - originally estimated at R343bn over the next five years - could well be higher.
Giving a written reply to the Democratic Alliance's Manie van Dyk, the minister said: "Some of these project costs are not yet firm and committed, and are therefore subject to change. The energy sector has also experienced substantial cost pressures over the last few years, and it is therefore
likely that this figure will be higher. Eskom is currently in the process of reviewing the capital expansion projects, and at this stage, updated and approved figures are not available."
He said that although Eskom traditionally borrowed the bulk of its long-term capital from the domestic capital markets through the issue of Eskom bonds, the local market could only accommodate a portion of Eskom's required financing.
"It is estimated that about 60% of Eskom's future borrowings will originate from international markets in the form of public bond issues, private placements, export credit financing and loans from development finance institutions," Erwin said.
Confirming that government would consider providing guarantees to enable Eskom to access funding otherwise not available, Erwin added: "Government is cognisant of Eskom's critical role in the economy and the importance of a
solid investment grade credit rating, and thus remains committed to ensuring Eskom's financial stability."
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