http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.14Change: 0.04
R/$ = 10.52Change: 0.01
Au 1304.62 $/ozChange: 5.74
Pt 1486.50 $/ozChange: 13.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Oct 28, 2010

R350bn in guarantees opens way for big Eskom bond assault, bankers appointed

Back
Engineering|Eskom|Projects|Transnet|United States|R142-billion Kusile Power Station|Gross Domestic Product|Product|Brian Dames|Hilary Joffe|Power|Pravin Gordhan
Engineering|Eskom|Projects|Transnet||||Power|
engineering|eskom|projects|transnet|united-states|r142-billion-kusile-power-station|gross-domestic-product|product|brian-dames|hilary-joffe|power|pravin-gordhan
© Reuse this



Confirmation by Finance Minister Pravin Gordhan of an additional R174-billion in government guarantees for Eskom forms part of a bigger funding package for the State-owned power utility, which is pursuing a R553-billion, seven-year programme to add 13 000 MW of generation capacity to the power-stressed grid.

Gordhan, who was expected to make the announcement in his Medium Term Budget Policy Statement (MTBS), instead disclosed the increase in presentation to a parliamentary committee on Thursday.

The R174-billion is in addition to the government guarantees of R176-billion announced in 2009, as well as a R60-billion subordinated loan injection, which had flown from the National Treasury to the utility over the past few years.

Gordhan said that the R350-billion in guarantees would enable the utility to continue with its build programme through to 2017.

Eskom CFO Paul O'Flaherty welcomed the announcement and told Engineering News Online that it could be viewed as the "first part" of a larger funding package, which has been under discussion for a number of months.

The next stage would involve a "recapitalisation" of Eskom through a further equity injection, which should be announced soon.

But the guarantees in themselves would be sufficient to allow Eskom to approach the domestic and international bond markets to raise the borrowings necessary to close a significant funding shortfall, which peaks in the first three years at over R100-billion.

It was particularly supportive of Eskom's stated intention to approach the international capital markets for funding in early 2011.

THREE BANKS SELECTED

O'Flaherty confirmed that the utility had selected three banking partners, Bank of America Merrill Lynch, Absa-Barclays and JP Morgan to help it with the design and implementation of what will be a multibillion-rand international bond programme, which could kick off in the US early next year.

He refused to be drawn on the size of the first tranche, save to say that it would be "sizeable".

He also confirmed that Eskom was considering an option to accelerate its bond-raising efforts, owing to the strength of the rand and the favourable interest-rate environment. "There could definitely be merit in raising more earlier," O'Flaherty told Engineering News Online.

Eskom has indicated previously that it could borrow R90-billion a year over a three-year period to help fund the programme and that up to R50-billion of that will be sourced from the international markets.

The balance of the funding would arise from shareholder equity, loans and guarantees, as well as from consumers, who are facing strongly rising tariffs of around 25% a year between 2010 and 2013.

The utility was also targeting cost savings of R20-billion over the next three years, with most of these likely to arise from efficiencies surrounding its yearly procurement budget of R90-billion.

In the MTBPS, Gordhan cautioned that the total public sector borrowing requirement would be higher over the medium term to March 31, 2014, owing primarily to the borrowings that will be needed to part-fund the capital expenditure programmes of State-owned enterprises (SoEs), such as Eskom and Transnet.

The public-sector borrowing requirement is expected to be 10,1% of gross domestic product in 2010/11 and the SoEs are expected to add over R320-billion to public sector debt between 2010/11 and 2013/14.

Gordhan's announcement dovetailed with an earlier assertion by Eskom CEO Brian Dames, who announced that its current projects were now "fully funded".

Dames added that it was, thus, moving ahead with the outstanding orders for the R142-billion Kusile power station, the first unit of which was now scheduled to come on line in 2015, instead of 2014.

 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines
 
 
 
 
 
 
 
 
Other Electricity News
Blue Label Telecoms, in conjunction with online partner Prepaid24, has launched a new mobile app to enable users to recharge electricity and airtime on the go and at any time. The Prepaid24 Mobile App, which is available for Android, Blackberry or Windows device...
Mike Rossouw
Eskom’s appointment of former mining executive Mike Rossouw on a one-year, extendable assignment appears to be closely associated with Public Enterprises Minister Lynne Brown’s appeal for “extraordinary” steps to be taken to deal with the “unsatisfactory”...
Global revenues from solar energy operations could double from $59.84-billion in 2013 to $137-billion in 2020, new analysis from Frost & Sullivan shows. The consultancy’s ‘Global Solar Power Market’ report says the total global installed solar photovoltaic (PV)...
More
 
 
Latest News
Updated 17 minutes ago State-owned freight logistics group Transnet has awarded integrated solutions provider Tenova Mining & Minerals South Africa a contract for the supply of three reverse-pulse bagfilters. Two of the filters would be installed on multiproduct rail tipplers and one on a...
Updated 20 minutes ago Liquidators have now been appointed to wrap up the liquidation of financially distressed civil engineering group Protech Khuthele Holdings. Theodor Wilhelm van den Heever, Mark Abraham Christian, Irene Susan Ponnen and Mohamed Ismail Patel have been appointed to...
Updated 52 minutes ago Aluminium products supplier Hulamin, which on Monday reported a 42% year-on-year lift in earnings for the first half of 2014, has revealed that it is preparing an application for reciprocal import tariff protection, which it plans to lodge shortly with the...
More
 
 
Recent Research Reports
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
Real Economy Insight: Road and Rail 2014 (PDF Report)
This six-page brief covers key developments in the road and rail industries over the past 12 months, including details of South Africa’s road and rail network and prospects for both sectors.
Real Economy Insight: Steel 2014 (PDF Report)
This four-page brief covers key developments in the steel industry over the past 12 months. It provides an overview of the global and South African steel and stainless steel markets, South Africa’s major steel producers and events that have shaped these markets.
 
 
 
 
 
This Week's Magazine
Multinational semiconductor chipmaker corporation Intel announced its national campaign to further acquire partners to drive its She Will Connect programme, an initiative that aims to expand digital literacy skills to young women in developing countries, further into...
South Africa's MeerKAT radio telescope array programme should get back on schedule within a few months. This assurance has been given by SKA South Africa (SKA SA) associate director: science and technology Prof Justin Jonas. Early last month, Science and Technology...
The Passenger Rail Agency of South Africa’s (PRASA’s) Metrorail service will remain a subsidised service following its current multibillion-rand rolling stock, station, depot and signalling upgrade programme. PRASA group CEO Lucky Montana has allayed fears that...
GARYN RAPSON Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will open the door for court battles to determine who will be held liable for the remediation
The uncertainties around the remediation of affected areas as addressed in the Contaminated Land Provisions in the National Environmental Management: Waste Act No 59 of 2008 will possibly spark litigation and disputes between landowners and businesses, contractors...
South Africa is currently the largest component of the African Development Bank’s (AfDB’s) active portfolio in Southern Africa, comprising 62.5% of the bank’s $7.9-billion exposure to the 12-country region – the second largest beneficiary is Mauritius, which...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks