Eskom tells investors it doesn't need more state funding

accreditation

Eskom has told investors it currently doesn’t need to approach the government for more support, even as a Covid-19-related national shutdown slashes revenue.

The company needs to raise R89 billion this year and R56 billion of that will come from an existing state bailout, Chief Executive Officer Andre de Ruyter and Chief Financial Officer Calib Cassim said on the call, according to investors who listened to it. Eskom spokesman Sikonathi Mantshantsha declined to comment.

"After accounting for the R56 billion of bailout funds committed this year, Eskom management estimates that it has R31 billion of funding needs for this year," said Ali Dhaloomal, a London-based credit research analyst at Bank of America. "Eskom doesn’t see the need to ask for additional state support at this point of time."

More lockdown?

About 40% of the remaining funding required has been committed by development finance institutions; the balance will come in the form of structured products from banks, export-credit agencies and the sale of domestic bonds, the people said. They asked not to be identified as the call wasn’t open to the media.

In a discussion dominated by investor concerns about cash flow, the executives said the company could withstand a few more weeks of a lockdown if it was extended. An estimated revenue loss of R4 billion is anticipated for the three-week lockdown that began 26 March.

The plunge in electricity demand due to the mandatory closure of mines and factories has allowed Eskom to boost maintenance to 9 500 megawatts of capacity from 4 000 megawatts. However, longer-term closures of plants for deeper maintenance will have to wait until the lockdown is lifted.

Yields on Eskom’s dollar bonds stayed lower after dropping earlier for the first time in eight trading days amid a resurgence of global risk appetite. The company’s $1.25 billion of 2025 securities gained 1.8% to 70.3 cents on the dollar, driving the yield down 48 basis points to 16.22%.

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For only R75 per month, you have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today.
Subscribe to News24
Rand - Dollar
14.34
-0.8%
Rand - Pound
19.96
-0.7%
Rand - Euro
17.08
-0.7%
Rand - Aus dollar
10.79
-0.5%
Rand - Yen
0.13
-0.5%
Gold
1,779.22
-0.2%
Silver
25.83
-0.5%
Palladium
2,560.50
-0.9%
Platinum
1,075.00
+1.7%
Brent Crude
74.90
+1.9%
Top 40
59,458
-0.0%
All Share
65,519
-0.1%
Resource 10
61,806
+1.1%
Industrial 25
87,346
-0.7%
Financial 15
12,800
-0.6%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Voting Booth
Should government have assigned a majority shareholding in SAA to the private sector?
Please select an option Oops! Something went wrong, please try again later.
Results
Yes, It's a good decision
67% - 379 votes
Not a good move
9% - 51 votes
Too early to tell
24% - 139 votes
Vote