http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 14.87Change: 0.01
R/$ = 13.30Change: 0.00
Au 1133.54 $/ozChange: -1.31
Pt 1018.00 $/ozChange: -2.00
 
 
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 Tenders Suppliers Directory Research Jobs Announcements Letters 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
 
 
 
 
 
 
Engineering|Africa|Eskom|Flow|Africa|Energy|Flow|Power
Engineering|Africa|Eskom|Flow|Africa|Energy|Flow|Power
engineering|africa-company|eskom|flow-company|africa|energy|flow-industry-term|power
© 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
Creamer Media Editor
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Electricity News
State-owned power provider Eskom received the Green Grand Prix Award at this year’s Sunday Times Top Brands Awards for preserving the environment and harnessing the country’s natural resources, based on spontaneous awareness among consumers. The award, which Eskom...
South Africa's coal-fired Medupi power station is expected to be fully operational in the first half of 2019, the Cabinet said on Friday. "Once completed, it will be the fourth largest coal-fired plant and the largest dry-cooled power station in the world," Cabinet...
Spanish technology group Abengoa has announced that it has been awarded a $25-million contract by South Africa’s State-owned electricity utility Eskom for the construction of two 400 kV transmission lines spanning 174 km. The company, which is building large-scale...
More
 
 
Latest News
A preliminary investigation by the Railway Safety Regulator (RSR) into the derailment of a Shosholoza Meyl train in Kimberley earlier this month, found that Transnet Freight Rail (TFR) had failed to communicate with the Passenger Rail Agency of South Africa (PRASA)...
Three of home improvement company Illiad’s major shareholders – Sanlam, Visio and Coronation, which held 69.25% – have agreed to vote in favour of a takeover by Steinhoff, with the company’s remaining shareholders to vote on the deal on September 29. Seventy-five per...
Government should face the fact that South Africa’s full-blown jobs crisis is a matter of urgent public importance, the Democratic Alliance (DA) said on Friday. MP James Vos, the DA shadow minister of tourism, was responding to a letter by Baleka Mbete, the Speaker...
More
 
 
Recent Research Reports
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.
Real Economy Insight: Construction 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.
Real Economy Insight: Electricity 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
Training company The Intelligence Transfer Centre will host the fourth yearly Environmental Crimes Conference at the Indaba Hotel, in Fourways, Johannesburg between September 9 and 10. Confirmed key regulatory bodies that will attend the event include the Department...
The government of Egypt has said it is ready to provide technical assistance to Malawi in the development of the Shire–Zambezi waterway, which is designed to link landlocked Malawi to the Indian Ocean by opening the two rivers for navigation. Egyptian ambassador to...
Kenya is finally set to start building a new multipurpose petroleum pipeline, after securing a $350-loan from a consortium of banks, including South Africa's Rand Merchant Bank. The other banks in the consortium are the Cooperative Bank of Kenya, Citibank's Kenya...
MARAIS VAN HEERDEN The owner/operator should be able to view the overall project design and progress made at any time
Three-dimensional (3D) engineering design models can now be viewed on tablets, which enable stakeholders to view the design without having to buy the design software used to create it, says engineering design firm 3DDraughting executive Marais van Heerden. The...
Ford’s newest offering in a long list of newcomers to the local market in the last two years is the B-Max multi-activity vehicle (MAV). The B-Max will play in the so called B-MAV segment, or the small MAV segment, currently dominated by Toyota’s Avanza, which sells...
 
 
 
 
 
 
 
 
 
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
Subscribe Now for $96 Close
Subscribe Now for $96