Eskom to explore funding sources

ESKOM will look at new funding opportunities such as Islamic bonds to finance its capacity expansion projects as it battles to keep the lights on in Africa’s biggest economy, the power utility said yesterday.

A lower than hoped for rise in power rates has left state-owned Eskom with an expected revenue gap of R225-billion over the next five years.

The utility had applied for a 16% hike in power rates over the next five years, which translated into revenue of R1-trillion over the period, but was granted an 8% annual hike.

“There is no doubt that the associated decrease in projected revenues will materially affect operations, including ability to obtain funding for future capacity expansion,” Eskom said in a report for its financial year that ended in March.

It said funding for the next 12 to 18 months would be sourced from the issuance of domestic and international bonds, export credit agency-backed financing, development finance institutions and the domestic commercial paper market.

“New opportunities from alternative funding sources and products such as Islamic funding (sukuk), preference share-type funding and project-based funding will also be explored, ” the company said.

Eskom currently needs R300-billion for capacity expansion and it said nearly 83% of this had been secured. –