Eskom may need private partner to fund expansion

JOHANNESBURG (Reuters) - South Africa's Eskom

may have to form a public-private partnership to fund its new power generation programme without having to increase tariffs by 90 percent, a government official said on Thursday.

Eskom applied for a 34 percent increase in the tariffs last month, but said it might have to ask for more by the end of the year if it fails to source the money elsewhere.

The state-owned utility has launched a 385 billion rand expansion over five years to ease power shortages in Africa's biggest economy, but has failed to raise all the capital in the face of the global financial crisis.

The country's power regulator said last week Eskom would need a 90 percent increase in tariffs this year if it failed to get the funding required for this year's part of the programme.

Nelisiwe Magubane, deputy director general at the country's newly formed energy ministry, said the alternative option was for Eskom to partner with others, or the government to give Eskom another capital injection or supply further guarantees.

"Eskom can request government to get more guarantees, (can ask) government to do an injection or ask for a partnership so that the projects get done," Magubane said.

She said no projects would be delayed given the necessity to increase power supply in the country.

Magubane said Eskom had not yet approached the government about a partnership possibility, but discussions on the proper funding model for the utility were ongoing.

She said the Kusile power plant project -- one of two coal-fired 4,800 MW power stations Eskom is building as part of the expansion programme -- could end up in a partnership deal.

She said the government was working to find a way forward for its nuclear programme which has stalled after Eskom cancelled a tender process last year citing financial woes.