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Eskom to Build on Bond Success With Power Projects on Schedule

Jan. 22 (Bloomberg) -- Eskom Holdings SOC Ltd, which generates 95 percent of South Africa’s electricity, will look to sell more debt as its projects to build more capacity remain on schedule.

“We’re very pleased with some of the noises we’ve been getting from some of the ratings agencies recently and we have no doubt that we would be able to feature well in the international bond market,” Steve Lennon, the utility’s sustainability executive, said in a Bloomberg TV Africa interview with Eleni Giokos in Davos. “We’ll continue to tap the local and international bond market.”

After delays including labor strikes and contractors missing deadlines, the company estimates it will complete the first unit of the planned 4,764-megawatt Medupi power plant in the second half of this year. Fitch Ratings upgraded the utility’s national long-term rating one step to AAA, the highest assessment, last week. One megawatt is enough capacity to power 2,000 average European homes.

The yield on Eskom’s $1 billion of debt due in August 2023 fell eight basis points, or 0.08 percentage point, this year to 6.38 percent on Jan. 17, the lowest since Nov. 1.

“I don’t anticipate further delays” on construction of the Medupi plant, Lennon said. “That’s the program that we’re still working towards, we’re optimistic that we will be there. he said. The 4,800-megawatt Kusile plant, set to be the third largest coal-fired power plant, ‘‘is also on track,” Lennon said.

South Africa won’t see a repeat of the rolling blackouts that cut power to industrial users in 2008, shutting mines and factories for five days.

“There’s a lot more maturity amongst the business community and amongst the South African consumers when it comes to electricity and we made great strides in the more efficient use of electricity in South Africa.”

To contact the reporter on this story: Paul Burkhardt in Johannesburg at pburkhardt@bloomberg.net

To contact the editor responsible for this story: John Viljoen at jviljoen@bloomberg.net

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