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POWER utility Eskom will have to raise most of its funding needs from domestic bond issues due to lack of liquidity in international markets, ratings agency Fitch said yesterday.
Eskom has launched a R385billion expansion programme over five years to boost power supply in Africa's biggest economy, but has had to delay some projects as it failed to raise all the money needed.
Fitch said appetite for bonds may be limited as South Africa battles to recover from its first recession in 17 years. "Investor appetite for this level of issuance is, however, uncertain at this point, and would depend on further market development and a real recovery in the South African economy, which is not expected until late 2010," it said in a statement.
Eskom posted the biggest full-year loss in the company's history for the year to end-March, and is struggling to raise capital to built power stations and avoid another power crisis like the one the country experienced last year.
Eskom said it would rely on an increase in tariffs, borrowings and government loans to pay for the expansion. The utility was granted a 27,5 percent tariff rise last year and a 31,3 percent rise this year, fuelling inflation fears, but the national energy regulator says Eskom might need further increases of up to 60 percent. Eskom submitted its latest application to the regulator last week. The National Treasury said in its 2009 budget in February it would offer Eskom loan guarantees of R175,97billion over 5years to help it raise funds, on top of a R60billion, three-year loan announced last year. - Reuters