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Johannesburg - If Eskom CEO Brian Molefe has his way, Medupi Power Station’s Unit 5 will be pumping power into the country’s grid before the official launch in April 2017.
In an interview with City Press this week, Molefe said there was “no way” the country’s three new power stations – Medupi, Kusile and Ingula – would experience further construction delays.
Molefe is hard at work with contractors to ensure the units are switched on as soon as possible.
The switch-on of Unit 6 at Medupi in August – which added 794 megawatts to the grid – meant that Eskom could begin much-needed maintenance on other ageing units.
“May 2017 is our target date, but we are going to try to do it earlier – but definitely not later.
“Later is out of the question. No more delays at Kusile, Medupi and Ingula. We will try our level best, unless something goes terribly wrong, like a contractor strike or something,” said Molefe.
He was confident that additional capacity generated from any of the three new power stations that were being completed would enable Eskom to stabilise antiquated power stations through planned maintenance.
“If we bring additional capacity from the new build programme ... we have up to 47 000MW and we can do more maintenance.
“The units we’re maintaining will become more reliable and we will reduce unplanned maintenance – then we can do more planned maintenance. I think that, by next year June, we will be able to do more planned maintenance,” said Molefe.
He also revealed that Eskom hoped to generate up to $1bn from investors through its bond offer next year, which had increased in value despite ratings agency Standard & Poor’s giving the utility’s credit profile a “junk” status.
Despite Eskom’s credit status being below investment grade, the outlook from Moody’s and Standard & Poor’s for the utility was stable, said Molefe.
“That gives us something to work with. If we didn’t have support from the sovereign in the government, it would be a different story. It would be impossible for us to go into the markets,” said Molefe.
He said investors showed interest in Eskom bonds when executives visited London earlier this month, just as load shedding hit the UK.
“We presented different ways of doing things now at Eskom, and we presented the liquidity story. We’re no longer in a space where it was said some time ago that Eskom didn’t have cash and we couldn’t pay salaries.
“We’re not in that space any more. We are liquid. We continue to successfully negotiate facilities that make it possible to fund ourselves, and the bond market has reacted very positively to the fact that we’ve had no load shedding for 100 days. In fact, the price of our bonds has improved relative to emerging markets and other parastatals.
“Eskom has been improving and a number of investors are now looking for exposure because they believe that if they buy now, and we sustain the story and the price improves even further, they will be able to make a return on their investments,” said Molefe.
In January, Eskom raised $1.4bn in the bond market in a single transaction, something Molefe said was an indication that “investors believe in the power utility’s story – it’s just that the hype from the media was a little overdone”.
He said last week’s 8% tariff increase application, which Eskom asked the National Energy Regulator of SA to approve, was not a new regulatory clearing account application, but merely a request to be reimbursed the R22.8bn Eskom spent between March 2014 and March 2015 to keep the lights on.
With a R3bn profit and earnings before expenditure of R25bn last year, and government injecting R23bn and writing off shareholders’ loans of R60bn, Molefe said Eskom bonds were not a bad investment.
“The fact that we are quasi-sovereign means government still has an investment rating. Government bonds are still rated and we are close to government.
“Ratings agencies take that into consideration – that although on a stand-alone basis, we are below investment grade, but the sovereign investment grade is good and the government has undertaken to support us and make sure there continues to be electricity,” said Molefe.
Eskom will tomorrow announce details of its €150m (R2.24bn) credit facility agreement with the French Development Agency.
