Oct. 25 (Bloomberg) -- Eskom Holdings Ltd., South Africa’s state power utility, said it plans to raise “significant” funds from the debt markets early next year to help fund a 190 billion-rand ($27 billion) gap in its expansion plans.
“We intend to approach the international bond markets early next year,” Chief Executive Officer Brian Dames told reporters in Johannesburg today. “The markets are very liquid and we know that there’s a significant appetite for Eskom out there. There is significant long-term money available.”
Eskom, which supplies about 95 percent of South Africa’s power, is spending 485 billion rand building new power plants and reviving mothballed generators to overcome a capacity shortfall. A power shortage shut some mines and smelters for days in early 2008 and the utility has warned of possible cuts in the next few years.
Eskom can’t raise all the funds it needs “immediately” and the first portion of debt will “set the benchmark for the market,” Dames said. It will be a “quite significant” amount and “will certainly be raised in the U.S. bond market,” he said. That will then be followed by a “full program of fund-raising for the next year or so,” Dames said, without commenting further.
The largest plants in Eskom’s expansion plan are the Medupi and Kusile coal-fired power plants.
The first unit of Medupi, the most advanced project, is now expected to start generating in the fourth quarter of 2012, compared with an earlier start date of September 2011, the utility said in an e-mailed response to questions today.
First commercial production from Kusile is expected “at the beginning of 2015,” Eskom said. That compares with an initial forecast of June 2013, it said. The cost of Kusile is now also expected to be more than the estimated 142 billion rand because of an escalation in construction costs and interest charges on the project, Dames said.
Eskom will also be the lead partner in South Africa’s planned nuclear power plants, Dames said on Oct. 23. The country plans to build six plants by 2023 to deal with an energy shortage in Africa’s biggest economy, the Department of Energy said on Oct. 8.
BHP Billiton Ltd., Xstrata Plc and ArcelorMittal South Africa Ltd. are amongst South Africa’s largest power users. South Africa is the world’s biggest platinum producer and the third-largest miner of gold.
To contact the reporter on this story: Nicky Smith in Johannesburg at email@example.com
To contact the editor responsible for this story: Vidya Root at firstname.lastname@example.org