Further, Finance Minister Trevor Manuel hinted to possible additional support beyond the initial loans, which was also in line with a statement made on Thursday by Public Enterprises Minister Alec Erwin.
"In addition to the deeply subordinated loan, government will consider providing guarantees to enable Eskom to access funding otherwise not available," National Treasury said in a statement.
Manuel made the initial R60-billion commitment in his February Budget speech, but said on Friday that government had decided to bring forward the disbursements of the facility over three years, with the following profile: R10-billion for 2008/9; R30-billion for 2009/10; and R20-billion for 2010/11.
This was a material acceleration against the initial schedule, whereby R20-billion had been earmarked for allocation in the 2008/9 to 2010/11, with the bulk flowing in the latter years of a five-year injection.
Manuel indicated that he decision to front load the shareholder loan was based on an analysis of the best was "to ameliorate the negative impact on Eskom's balance sheet, while assisting with smoothing the impact of the tariff increases".
He added that the support would be in the form of a loan, with the terms and conditions of the loan having been designed "to be a deeply subordinated loan to ensure that senior unsecured lenders are not prejudiced".
"Government is cognisant of Eskom's critical role in the economy and the importance of a solid investment grade credit rating and thus remains committed to ensuring Eskom's financial stability," National Treasury said.
EUROPEAN ROAD SHOW
News of the injection comes as Eskom CEO Jacob Maroga and his finance director, Bongani Nqwababa, set off on a European road show, where they will map out how they plans to close a R150-billion funding gap through borrowings on the South African and international capital markets.
Nqwababa says that with the injection, the balance of the funding requirement would have to arise from borrowings and tariff increases, with the National Energy Regulator of South Africa having already outlined a price path that is likely to involve yearly increases of between 20% and 25% for the next three years.
But the National Treasury injection will also be crucial to "neutralising" Eskom's cash flow for the 2008/9 and 2009/10 financial years, where the utility, which reported a R974-million net profit for 2007/8, was anticipating operational losses. In fact, Eskom is expecting to dip into a R3-billion operating loss, before financing charges, during the current financial year.
"The view that we took was to stabilise the rating before we go to the international market, because it will be most inappropriate to go on a bond road show when you are on credit watch, or on possible downgrades with others," Nqwababa says, noting that Standard & Poor's, Moody's and Fitch Ratings are all currently reviewing the group's rating.
"So we would rather that the rating agencies pronounce to create certainty," he explains, indicating that they should be in a position to do just that by the weekend, when National Treasury will reveal its hand.
UP TO R90BN TO BE RAISED OFFSHORE
Eskom has also made progress in determining what it believes to be the optimal funding mix, with Nqwababa explaining that it will be seeking to maximise local borrowings, given that it will carry lower currency and interest rate risk.
But given the magnitude of the borrowing requirement, it would be "unrealistic" to raise the lion's share of the debt locally. "So we are looking at a minimum of 40% from the domestic markets and a maximum of 60% from offshore," he reveals, adding that the local borrowing will comprise of long-term bonds, with tenures of between 20 and 30 years.
Nqwababa stresses it will also be seeking to diversify both the composition and geographical make up of the 60%, or R90-billion, that it will be seeking to secure internationally.
"It will be from export credit agencies, development finance institutions (DFIs), such as the World Bank and the African Development Bank, and then from traditional offshore bond issues and syndicated loans," he outlines, adding that, while Europe will remain central, it will also seek to access markets in the America's and Asia.
Eskom is particularly excited about the prospect of DFI finance, with negotiations for a $500-million African Development Bank loan at an advanced stage. Further, there is a real prospect of Eskom accessing World Bank finance, which would be significant given that the South African government has, hitherto, eschewed this source of funding for a range of reasons.
"Last Friday, I saw the World Bank and it looks like there is going to be more convergence between the World Bank and the South African government . . . so there are opportunities there, which are very significant."
Eskom will also consider new source of funding such as those available in some of the strongly emerging sovereign wealth funds, which are gaining prominence in Asia and the Gulf.
He says that, domestically, there is appetite from asset managers who are generally overweight in equities, or where their bond exposure is almost exclusively to the banks.
But he acknowledges, though, that there are competitive pressures in the infrastructure space, given that Eskom will be seeking to access the market together with Transnet and the South African National Roads Agency, which will also be raising tens of billions domestically.
But given low borrowings from the government itself, Eskom is convinced that there is still sufficient capacity.
"Internationally, it is obviously quite difficult at the moment," he acknowledges, adding that global financial disquiet is not only increasing the cost of funding, but, even more crucially, liquidity.
"We plan to manage this through diversification of funding sources and geography," he concludes.