The government has extended guarantees to state power utility Eskom to help finance its electricity generation programme, Finance Minister Pravin Gordhan said on Thursday.
Eskom is on a massive capacity building programme to bulk up its power grid and prevent future blacks, after a 2008 power crisis shut down mines and other industries, costing billions of rands.
“We have extended guarantees to Eskom by R174-billion. Eskom will now have R350-billion from government to enable it to continue with its build programme through 2017,” Gordhan said in a presentation to a parliamentary committee.
Eskom has been struggling to find all the money it needs to pay for two new 4 800 MW coal-fired power plants.
The utility has said it will tap the US bond market in early 2011 for cash to pay for new power stations and other infrastructure desperately needed to avoid a power crunch.
Officials have warned of rolling blackouts from 2011 to 2016 unless extraordinary measures are taken to generate more power.
Financially sound
A senior Treasury official said Eskom is financially sound and will be able to service its debt.
“Backed by these guarantees … when they complete (new power stations) Medupi and Kusile, the energy that is going to be generated by these power stations should actually enable Eskom to service its debt,” Lungisa Fuzile, head of asset and liability management at the Treasury, said at the hearing.
Treasury Director-General Lesetja Kganyago told legislators it was necessary to allow foreign exchange to go out of South Africa to mitigate the recent appreciation in the rand. – Reuters