Jul 18, 2008
Daily podcast – July 18, 2008Back
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From Creamer Media in Johannesburg, I'm Fatima Gabru.
Making headlines today:
State-owned power utility Eskom has provided fresh insight into its much-anticipated funding plan for a 343-billion rand, five-year capital expenditure programme, which is viewed as essential if South Africa is to add some 19 000 mega watts of much needed generation capacity by 2017 and restore a reserve margin of 15%. The margin is currently standing at a paltry 8%.
The utility will go on an international road show next week to map out how it plans to close a 150-billion rand funding gap through borrowings on the South African and international capital markets, with CEO Jacob Maroga expecting clarity on the promised 60-billion rand shareholder injection from National Treasury ahead of that tour.
Finance director Bongani Nqwababa says he is unable to provide details on the precise nature of the injection, which many of the credit rating agencies have indicated will be crucial to stabilising Eskom's rating, but he confirms that the transfer will be ‘front-loaded'. In other words, the bulk of the injection would flow in the first few years, as opposed to the initial plan, which would have seen National Treasury injecting the bulk of the money in the last two years of a five-year rolling injection.
This trend is also unlikely to be reversed in the current financial year, with Eskom expecting to burn between 135- and 140-million tons of coal during 2008/2009.
Much of the additional coal is also being sourced outside of the confines of the State-owned group's favourable long-term contracts with tied collieries, dramatically increasing the direct cost of primary energy and its associated logistics, and placing strain on its financial ratios.
Eskom CEO Jacob Maroga:
Aim Resources attributed its funding woes to the current zinc prices and forecasts, which made it difficult for zinc projects to secure funding, as well as a downturn in both debt and equity markets.
The company said on Thursday that spot zinc prices had fallen "well below" the level required to provide an adequate return, and below the predicted cash break-even point.
Raids on steel companies may have unearthed cartel
In political news:
EU to widen Zimbabwe sanctions say diplomats
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