State-owned power utility Eskom said on Thursday said that it would be engaging with government over the next few days on the details of the R60-billion worth of financial support offered in the National Budget.

CE Jacob Maroga praised the State's speed in countering the current crisis situation, with specific reference to the release of a national response plan to the electricity shortage, President Thabo Mbeki's State of the Nation address and Wednesday's Budget, which had "put money on the table".

However, he acknowledged that there was "still a lot of work" to do in ironing out the details of the loan.

FD Bongani Nqwababa reiterated that it was still "early days" and that the terms in which the financial support was to be delivered were yet to be defined. This would include the extent to which the loan was subordinated, over what term and the interest rates.

Finance Minister Trevor Manuel was quoted as saying on Thursday that there would be "very tough" negotiations with Eskom over the repayment of the loan.

"The terms will have to be worked out, it's not in our interests to try and squeeze a short-term return," Sapa quoted him as saying.

Meanwhile, Nwqababa said that Eskom would now "decisively" deal with its credit rating, which was placed on a negative watch by ratings agency Standard & Poor's in January.

Nqwababa told journalists that stabilising the troubled utility's credit rating was a priority, as it would impact on the company's market access when it came to raising money.

Despite the additional R60-billion that was being added to Eskom's budget, the utility would still experience a shortfall, which Maroga explained would be plugged by charging higher tariffs.

Eskom agreed with Manuel's statement in the Budget speech that, owing to the progressive reduction of electricity prices during the 1980s and 1990s, the tariff structure was now too low to support its required borrowing.

"The constantly rising demand for power, pressure on our facilities, and rising costs of coal - our primary fuel - made it impossible for Eskom to meet the needs of South Africa on the long-term basis. The shareholder loan will begin to provide the impetus that Eskom needs to launch major programmes and boost construction plans across the board...," Maroga explained in a statement.

But, the utility reiterated that the new build programme and other programmes would have to be sustained by significantly higher tariffs.

The National Energy Regulator of South Africa last year agreed to a 14,2% tariff increase, which will come into effect on April 1.

Besides the increased tariffs Eskom would also have to continue borrowing money. Maroga said that a combination of tariff increases and shareholders support would enable the utility to remain financially stable while carrying out its capital expenditure of R300-billion over the next five years and over R1-trillion by 2025.