JOHANNESBURG (Reuters) - South African state utility Eskom is likely to run up about 400 billion rand of debt over the next three years as it pays for upgrades to keep the lights on in Africa’s biggest economy, chief executive Brian Dames said on Wednesday.
In a briefing accompanying the Eskom’s interim results, Dames also said the power supply would remain tight until the first units of two major new power plants started to come online.
One of those, the 4,800 MW Medupi coal-fired power station, was expected to be delayed by about another six months due to construction problems from its late 2012 start until May 2013, putting further strain on the country’s electric grid.
“We have a very constrained power system,” Dames said.
South Africa’s grid, which almost collapsed in 2008 in a supply crunch that hit economic growth, is feeling the strain at the moment because of routine maintenance, but Dames said 385 megawatts would soon be added to the system.
Paul O’Flaherty told the same briefing the company is working to keep its capital expenditure programme in line with the money it is raising through bond issues, loans and tariff hikes.
“Our ratios from a credit-metric are improving but still are not of investment grade,” he said. Earlier this month, rating agency Moody’s downgraded Eskom’s outlook to negative from stable.
Eskom has had to impose hefty tariff increases over three years to pay for new power stations and improvements to the grid after two decades of underinvestment.
Those hikes have started to show through in increased revenues, with the firm reporting receipts of 63.8 billion rand in the first six months of the year, up from 51.1 billion from same period last year.
That represented a profit of 12.81 billion rand, from 9.5 billion a year ago.
Eskom said its surpluses would be reinvested or used to pay down debt.