Eskom gets R15bn rescue facility

The debt-laden Eskom, which is asking for a 15% tariff increase over the next three years, has concluded a R15 billion loan facility with a consortium of local and international banks.

The government guaranteed facility will form part of the financing of Eskom’s current capital expenditure programme.

The power utility’s Group Chief Executive Phakamani Hadebe said significant progress has been made in securing funding.

“We have made significant progress in transitioning the business and securing funding. We are pleased that lenders have elected to continue partnering with Eskom on our journey to complete the capital expansion programme for the benefit of South Africa’s economy,” said Hadebe on Friday.

He said it is encouraging to note that financial markets continue to view the utility in a positive light as the company strives towards financial and operational sustainability.

Meanwhile, general manager of treasury at the utility, Andre Pillay, said the conclusion of the loan facility will ensure that liquidity requirements are fulfilled timeously.

“To date we have raised and secured approximately 95% of the R72 billion funding requirement for financial year 18/19; the remaining 5% will be raised through various funding sources including domestic debt capital markets.

“The stable liquidity position places us in a position to focus on securing funding for the next financial year (financial year 19/20 of which 30% has already been secured),” he said.

Eskom is asking for a 15% tariff increase over the next three years

In January, the power utility made a desperate plea for higher Eskom tariffs over the next three years, as well as for more money from the government, while apologising to SA for the mess the utility is in.

Hadebe was speaking in Cape Town at public hearings held by the National Energy Regulator of SA (Nersa) to interrogate Eskom’s application for a 15% tariff increase beginning in 2019-2020.

The application needs to meet Nersa’s approval before it can be applied to customers.

Eskom is in a dire financial situation, with a R419bn debt it is unable to service from the revenue it earns. It costs more for it to generate electricity than it recoups from tariffs due to a high cost base, which Nersa believes should not be made the burden of the South African public.