R/€ = 15.16Change: -0.03
R/$ = 13.35Change: -0.02
Au 1156.06 $/ozChange: -2.88
Pt 981.00 $/ozChange: 2.00
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?

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 Tenders Suppliers Directory Research Jobs Announcements Letters About Us
RSS Feed
Article   Comments   Other News   Research   Magazine  
Aug 27, 2009

Eskom mulls ways to close R80bn funding shortfall

Eskom CEO Jacob Maroga and chairperson Bobby Godsell discuss the utility's financial sustainability. (27/08/2009) Cameraperson: Nicholas Boyd Video editing by: Darlene Creamer
Africa|CoAL|Coal-fired Power Station|Eskom|PROJECT|Projects|Renewable Energy|Renewable-Energy|Storage|Sustainable|Africa|Energy|Power
Africa|CoAL|Coal-fired Power Station|Eskom|PROJECT|Projects|Renewable Energy|Renewable-Energy|Storage|Sustainable|Africa|Energy|Power
© Reuse this

Eskom has said that it is determined to achieve ‘break-even’ at an operating level in the 2009/10 financial year, and CEO Jacob Maroga emphasised that ensuring a “sustainable funding solution” for the future was imperative.

Eskom, which posted a R9,7-billion loss for the year ended March 2009, expects an R80-billion funding shortfall for its expansion plans.

Maroga added that the utility would have a funding model finalised by the end of September.

“I am confident that the country will find an integrated funding solution,” he stressed.

Eskom chairperson Bobby Godsell said that the most important issue was to get clarity from South Africa on what an acceptable electricity tariff would be - one that would allow Eskom, co-generating industries, and independent power producers to get a fair return on power produced.

Once this issue was settled, the issue of equity and debt required to assist capital expenditure programmes could be clarified.

Looking toward the new build programme, which Eskom was undertaking to ensure it would have enough power to supply the anticipated future demand, Maroga said that the utility’s five-year capital expansion programme stood at R385-billion, primarily on already committed projects.

In the 2008/9 financial year, Eskom spent R47,09-billion on capital expenditure, and the largest projects being funded were the Medupi coal-fired power station, the Kusile coal-fired power station, and the Ingula pumped-storage project.

“Funding this programme at a time of global crisis is a challenge,” said Godsell.

He explained that if Eskom assumed that electricity tariffs increased at the same rate as the 31,3% recently granted for the next two years, then the utility would experience a shortfall of R80-billion for the build programme.

Godsell further said that Eskom was working “urgently” with both government and the National Energy Regulator of South Africa to close this funding gap, and “is confident that this can be done”.

However, if this gap could not be closed, the utility would have to introduce delays in some parts of the build programme.

Eskom also outlined targeted reductions for the 2009/10 year, and hoped to save R6,2-billion on primary energy costs; cut R7,1-billion in operating expenditure; as well as save R8,7-billion by deferring capital expenditure.

In the year under review, Eskom spent R25,3-billion on primary energy costs – a 38% increase from R18,3-billion in the prior year. Eskom also increased operating expenses by 32% in the 2008/9 financial year, to R29,3-billion. That said, revenues also increased by 21%, reflecting the increases in electricity tariffs, and the company’s turnover was R53,8-billion, compared with R44,4-billion in the previous year.

Eskom has already previously announced five projects that would be delayed, most being renewable energy projects.

With regard to projects that have been delayed, Maroga stated once again that “everything relies on finding a sustainable funding model, and next month we will have more clarity on that”.

Maroga said that Eskom made a conscious decision to “keep the lights on” and prioritised this, knowing that it would mean the utility incurring a loss at the bottom line.

He explained that if moneymaking were the priority “we could simply shut down those who are most expensive”.

Edited by: Mariaan Webb
Creamer Media Senior Researcher and Deputy Editor Online
© Reuse this Comment Guidelines (150 word limit)
Other Electricity News
The 5.8 MW Adams and 5.8 MW Bellatrix solar projects, in the Western Cape, have been selected under the Department of Energy’s (DoE’s) Renewable Energy Independent Power Producer Procurement Programme (REIPPPP), becoming the first projects under the programme to be...
It is “nonsensical” to compare South Africa’s nuclear ambitions with Germany’s mission to scrap nuclear in favour of renewable energy, according to the Nuclear Industry Association of South Africa (Niasa). German ambassador to SA Walter Lindner told delegates at the...
Airbus E-Fan
Airbus is working on using electricity as a means to power aircraft. This was highlighted on Friday by Airbus Defence and Space VP and Head of Disruptive Innovation Jan van Toor. He was talking at the Fifth Council for Scientific and Industrial Research Conference in...
Latest News
South African Airways (SAA) has enhanced its partnership with the airline’s in-flight duty-free concessionaire Tourvest Inflight Retail Services (TIRS), enabling Voyager members to earn miles when buying duty-free products and spend their miles when shopping for...
South Africa's new visa regulations are having an adverse impact on the country's tourism industry without proof that they are making any impact on child trafficking, according to Hussein Dabbas, International Air Traffic Association (Iata) regional vice-president...
The Council for Scientific and Industrial Research (CSIR) has developed a semi-autonomous solution for early pothole detection to potentially replace the often time-consuming expensive manual road inspection. Showcasing the Visual Surveying Platform (VSP), CSIR...
Recent Research Reports
Liquid Fuels 2015: A review of South Africa's liquid fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2015 Report examines these issues in the context of South Africa’s business environment; oil and gas exploration; fuel pricing; the development of the country’s biofuels industry; the logistics of transporting liquid fuels; and...
Road and Rail 2015: A review of South Africa's road and rail sectors (PDF Report)
Creamer Media’s Road and Rail 2015 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail infrastructure and network, the funding and maintenance of these respective networks, and...
Defence 2015: A review of South Africa's defence sector (PDF Report)
Creamer Media’s Coal 2015 report examines South Africa’s coal industry with regards to the business environment, the key participants in the sector, local demand, export sales and coal logistics, projects being undertaken by the large and smaller participants in the...
Real Economy Year Book 2015 (PDF Report)
There are very few beacons of hope on South Africa’s economic horizon. Economic growth is weak, unemployment is rising, electricity supply is insufficient to meet demand and/or spur growth, with poor prospects for many of the commodities mined and exported. However,...
Real Economy Insight: Automotive 2015 (PDF Report)
Creamer Media’s Real Economy Year Book comprises separate reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, gold, iron-ore and platinum sectors.
Real Economy Insight: Water 2015 (PDF Report)
Creamer Media’s Real Economy Year Book has been divided into individual reports under the banner Real Economy Insight and investigates key developments in the automotive, construction, electricity, road and rail, steel, water, coal, gold, iron-ore and platinum sectors.
This Week's Magazine
BUSINESS LEADERS PANEL Adam Craker, Ivor Chipkin, Alan Hosking and Allon Raiz at the 6th IQ Business Active Growth conference
At the sixth IQ Business conference held in Sandton last month, a panel of business leaders and academics advocated that business reclaims the initiative to spur growth in South Africa amid fragmented and haphazard political direction. Management consulting firm IQ...
The building industry is an essential component of the South African economy as it contributes about 15% to the gross fixed investment that drives the economy. However, with the country’s economy going through a tough time currently, this, in turn, reflects on the...
The recipients of the 2015 South African National Energy Association (Sanea)/South African National Energy Development Institute Energy (Sanedi) Awards were announced at a ceremony and banquet in Sandton last month. Sanea chairperson Brian Statham named Exxaro CEO...
ASHER BOHBOT EOH’s corporate goals were originally aspirations, but the company is relevant and is making a difference in the territories it operates in
As South African information technology (IT) firm EOH posted another full year of strong growth, CEO Asher Bohbot, known for his frank words, people-centric management style and stoic humanism, attributed the company’s continued South African and African growth to...
International heavy-equipment engine manufacturer Cummins’ regional distribution centre (RDC) in Woodmead, Gauteng, has halved the average logistics distribution time for clients in Southern Africa and allowed for critical or long-lead stock to be kept closer to...
Alert Close
Embed Code Close
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
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96