R350bn state guarantee for Eskom

1 November 2010

Finance Minister Pravin Gordhan has announced a further guarantee of R174-billion to allow Eskom to complete construction of South Africa’s two new power stations, taking total government backing of the state power company to R350-billion.

Addressing Parliament’s portfolio committee on finance in Cape Town last week, Gordhan said the additional guarantee would give the appropriate assurance that the government was standing by Eskom as it continued with its build programme.

The Medupi power station in Limpopo province is expected to be up and running by the end of 2012, with the Kusile power station in Mpumalanga due to follow four years later.

Eskom is also actively seeking to raise funds from the private sector. It recently announced its intention to tap into the US bond market in 2011, while it also secured a loan of R1.6-billion from two European banks in August, as well as loans of R28-billion from the World Bank and R21-billion from the African Development Bank earier this year.

R800-billion investment in energy

Speaking at the re-opening of the Camden power station in Mpumalanga last weekend, President Jacob Zuma the government was to spend over R800-billion on energy infrastructure over the next few years.

Zuma said the government was looking for funding solutions for Kusile power station, and that part of the R800-billion would cover Eskom’s R385-billion for expansion.

It is estimated that South Africa’s electricity demand is set to double in the next 20 years, hence the build programme, along with the move to bring back out-of-commission power stations.

Source: BuaNews