The National Treasury has decided to bring forward the disbursements of its loan facility to state-owned power utility Eskom, it said on Friday.
On February 20 Finance Minister Trevor Manuel announced an amount of R60-billion, over a five year period, in support of Eskom’s capital expansion programme.
Of this amount, R20-billion was earmarked for allocation in the 2008/9 to 2010/11 fiscal years.
Manuel also announced that the support would be in the form of a loan.
Subsequently, the government said it would help smooth the impact of the tariff increases so as to ameliorate the negative impact on Eskom’s balance sheet.
”Government therefore decided to bring forward the disbursements of the facility as follows: 2008/09 — R10-billion, 2009/10 — R30-billion and 2010/11 — R20-billion,” read a statement.
The terms and conditions of the loan have been designed to be a deeply subordinated loan to ensure that senior unsecured lenders are not prejudiced, the National Treasury added.
In addition to the deeply subordinated loan, government would consider providing guarantees to enable Eskom to access funding otherwise not available.
”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,” the National Treasury said.
On Thursday Eskom announced its annual results. The profit for the year for the Eskom group was R974-million compared to R6,4-billion in 2007 after taking into account the fair value loss on embedded
derivatives of R143-million, compared to a fair value gain of R4,3-billion in 2007.
The profit for the year for the company was R1,3-billion against R6-billion in the previous comparable period — after taking into account
the fair value loss on embedded derivatives of R149-million against a fair value gain of R4,1-billion in 2007.
Primary energy costs (mainly coal and diesel) rose from R13-billion in 2007 to R18,3-billion in 2008, while the growth in sales only amounted to 2,9%. – Sapa