http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.69Change: -0.02
R/$ = 10.96Change: 0.00
Au 1195.22 $/ozChange: -3.23
Pt 1225.00 $/ozChange: -4.50
 
 
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 Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Jun 06, 2008

Explicit State support needed to secure Eskom rating if tariff hike is refused - Fitch

Back
 
Crosbie|Engineering|Johannesburg|London|Africa|Eskom|FitchRatings|Flow|Moody's|Standard & Poor's|Africa|South Africa|Credit-ratings Agency|Electricity|Energy|Flow|South African Government|Power|Veronica Kalema
Engineering||Africa|Eskom|Flow||Africa||Energy|Flow||Power|
crosbie|engineering|johannesburg|london|africa-company|eskom|fitchratings-company|flow-company|moodys|standard-poors|africa|south-africa|creditratings-agency|electricity|energy|flow-industry-term|south-african-government|power|veronica-kalema
© Reuse this



Credit-ratings agency FitchRatings, which has State-owned power utility Eskom on an "negative outlook", would probably move to downgrade the utility immediately if it failed to secure a 60% tariff increase from the regulator later this month, unless the announcement was associated with a clear signal form government that there would be further support beyond the R60-billion already promised.

However, FitchRatings director: corporates Alistair Crosbie did not concur with suggestions that a downgrade would limit the utility's access to international capital markets, given its position as a State-owned entity as well as its market dominance.

He agreed, though, that the pricing of any future debt raised by Eskom would be made more expensive should it be downgraded by Fitch and others.

"Eskom is going to remain the dominant electricity provider in South Africa, wholly-owned by the government, for the immediate term at least.

"That alone will carry them . . . so we expect that lenders will not be scared away by a downgrade," Crosbie explained.

Speaking at a media briefing in Johannesburg, Crosbie indicated that the tariff determination by the National Energy Regulator of South Africa (Nersa) would be the main trigger for any downgrade.

Nersa, which had been in touch with FitchRatings and the other agencies on their requirements, was currently in a process of deliberating on Eskom's request for a 60% upward revision to its tariff for 2008/9, from the 14,2% already sanctioned for the year. It would make its decision known on June 18.

"If they [Eskom] don't get the increase, we would immediately look to see whether government would be allocating more than the R60-billion, which they had indicated they would be allocating.

"We would expect to see a signal of some additional support from government and if that is not forthcoming, that would probably trigger a downgrade by a single notch, to AA+," Crosbie said in response to a question posed by Engineering News Online.

He stressed that it, and other ratings agencies, could only work with the facts at their disposal and that, in the absence of an explicit guarantee from Eskom's shareholder, the South African government, it had to base Eskom's rating on its financial ratios, which were likely to weaken considerably as the gap between its revenue and its expenditure grew.

Even if the R60-billion term sheet from National Treasury was more front-end loaded than the current proposal, which would see most of the money flow in the last couple of years of a five-year transfer window, it also might not be sufficient, in Crosbie's view, to prevent a downgrade.

"I think the other ratings agencies are pretty much on the same wavelength," he added.

In fact, international ratings agencies Moody's and Standard & Poor's have both indicated that they might cut Eskom's credit rating by at least a notch, unless there was greater certainty on the future funding sources for the group's R343-billion capital programme.

But FitchRatings director Veronica Kalema, who was in South Africa this week from London as part of a review of South Africa's sovereign rating, said she did not believe that any downgrade of Eskom would necessarily have a knock-on effect to South Africa's sovereign rating, as some have suggested.

South Africa, despite its current internal and external shocks, appeared fundamentally sound, with its debt ratios "still good". But she noted that the power crisis, together with surging inflation, was emerging as a key risk factor.

Kalema, who heads the group's Middle East and Africa sovereign-ratings team, said a review of South Africa's rating should be published within four to six weeks.


Edited by: Terence Creamer
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Electricity News
South Africa’s Finance Minister Nhlanhla Nene
South Africa’s Finance Minister Nhlanhla Nene has emphasised the role of the private sector in delivering the 51 Programme for Infrastructure Development in Africa (Pida) projects, collectively valued at $68-billion, being prioritised for implementation by 2020....
Solidarity CEO Dirk Hermann
Trade union Solidarity, which has 7 000 members working at Eskom, is urging the State-owned utility to abandon its voluntary-severance offer to employees and focus instead on rebuilding staff morale as part of a broader effort to improve the currently dire outlook...
Article contains comments
Article contains comments
More
 
 
Latest News
The Central Energy Fund (CEF) has backtracked on its decision to appoint Tshepo Kgadima as a director and chairperson of national oil company PetroSA following the public “controversy” dogging the new appointee. Nonhlanhla Jiyane had now been appointed as interim...
South Africa’s Finance Minister Nhlanhla Nene
South Africa’s Finance Minister Nhlanhla Nene has emphasised the role of the private sector in delivering the 51 Programme for Infrastructure Development in Africa (Pida) projects, collectively valued at $68-billion, being prioritised for implementation by 2020....
This year, 82 companies met the JSE’s Socially Responsible Index (SRI) requirements relating to environmental, social and governance (ESG) policies and management practices, compared with only 72 companies in 2013, as companies become more aware of how they...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 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 network, the funding and maintenance of these respective networks, and the push to move road...
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.
 
 
 
 
 
This Week's Magazine
Updated 5 hours ago As the City of Ekurhuleni continues its bid to develop the largely industrialised metropole into the continent’s first aerotropolis, executive mayor Mondli Gungubele has committed the city to creating a predictable, stable and enabling business environment in which...
Updated 5 hours ago While Ford Motor Company of Southern Africa (FMCSA) did not have “significant issues” with power supply in Gauteng, it was a different story in the Eastern Cape, said FMCSA and American Chamber of Commerce in South Africa president Jeff Nemeth earlier this month....
Updated 5 hours ago In 2000, exports into Africa from South Africa represented less than 5% of the turnover of Federal Mogul Motorparts Africa, with sales largely centred around Zimbabwe, Zambia, Malawi and Mozambique. Today, African exports represent 30% of sales, with trade expanded...
Updated 5 hours ago The Malawi government has launched a $50-million project to upgrade the Kamuzu barrage, on the Shire river, an outlet of Lake Malawi, which is used to control the flow of water from the lake to the lower Shire area. The project will run from this year to 2017 and...
Updated 5 hours ago   Our new Technical and Vocational Education and Training (TVET) Colleges will replace the Further Education and Training (FET) Colleges which have served us for the past twenty years.  The buildings will be the same and most of the staff will be the same but as the...
 
 
 
 
 
 
 
 
 
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