http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.88Change: 0.04
R/$ = 12.69Change: 0.00
Au 1083.77 $/ozChange: -7.68
Pt 951.50 $/ozChange: -14.50
 
 
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 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
Due to increased electricity demand and a shortage of generation capacity, Eskom will implement stage 2 load shedding this afternoon. This after the power system was constrained but stable for much of Monday.
Energy Minister Tina Joemat-Pettersson
The Democratic Alliance says it is planning to call on parliament’s portfolio committee on energy to summon Minister of Energy Tina Joemat-Pettersson to provide details on the country’s multi-billion rand Nuclear Build Programme. DA energy affairs spokesman Gordon...
A “record” $700-million in guarantees has been secured from the World Bank for Ghana’s Sankofa gas project to advance the West African nation’s energy transformation. The World Bank approved a $500-million International Development Association payment guarantee to...
Article contains comments
More
 
 
Latest News
The Department of Labour (DoL) will on Tuesday start hosting a series of national public hearings to review the farming and forestry sectors’ minimum wages and conditions of employment as prescribed in Sectoral Determination (SD) 13. The department explained in a...
The Independent Communications Authority of South Africa (Icasa) on Monday announced that it was “eager” to “reinitiate” the licensing process for the assignment of the high-demand spectrum. Icasa, which was responsible for the allocation of spectrum to broadcasting...
Lien Visage, a community development worker at Donkerbos, near Rietfontein, has won the Witzenberg regional of the 2015 Farmworker of the Year competition, an initiative celebrating excellence in the Western Cape’s agricultural sector. “South Africa has earned a...
More
 
 
Recent Research Reports
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.
Real Economy Insight: Road and Rail 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
Daimler truck test engineer Dirk Stranz pushes one button, and then retracts his hands from the steering wheel of the Mercedes-Benz Future Truck 2025. “And now the truck is driving itself.”
The statutory body responsible for skills development and support in the banking sector, BANKSETA, was investing R68-million in the capacity building project of the University of Venda (UniVen), announced Bankseta company secretary Caroline King at a media event in...
LIONEL MOYAL Cloud services providers must compete against other cloud services providers for business by providing up-to-date systems and services
Legacy information technology (IT) systems are becoming increasingly obsolete because of the maturity, efficiencies and cost effectiveness of cloud-based IT services, says information and communication technology major T-Systems subsidiary Intervate head Lionel...
ARMANDÉ KRUGER Balancing the collection and processing of data must be aligned to strategy
Many complementary services enable companies to derive broad value from data inside and outside them. The complexity of data management means that companies’ strategies determine the various data systems and functions they will use, says PBT Group regional sales...
The South African Civil Aviation Authority (SACAA) has announced that it had awarded the country’s first remotely piloted aircraft systems (RPAS) pilot’s licence. It was issued on Friday, July 10, to SACAA employee and qualified commercial pilot Nicole Swart,...
 
 
 
 
 
 
 
 
 
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