20100907
africanews

CAPE TOWN (Reuters) - South African power utility Eskom aims to issue bonds in the United States and Europe this year as part of a plan to raise up to $6.9 billion over the next three years, a top executive said on Tuesday.

Eskom, which uses mainly coal-fired power stations to supply most of the power to Africa's largest economy, needs funding for a planned multi-billion dollar programme to help alleviate chronic power shortages.

The utility is waiting for government approval of its plan to raise 45 to 50 billion rand over the next three years, Paul O'Flaherty, Eskom's finance director, told Reuters on the sidelines of a parliamentary briefing.

"We will be looking at the U.S. and European bond markets where we think there is a lot of appetite for Eskom," he said. "We will have to work out when the market appetite is at its best, but it should be this calendar year. That's our intent."

Government approval is expected within weeks, he said.

South Africa's national grid nearly collapsed in early 2008, forcing mines and smelters to shut and costing the country billions of dollars.

O'Flaherty said Eskom's total funding gap over the next seven years stood at around 45 billion rand, although most of that arose in the next three years.

Later he told journalists that government, which has provided a debt guarantee to Eskom of 176 billion rand, was looking to recapitalise the utility as well providing further loans or a hybrid of the two. In 2009 the National Treasury agreed to lend Eskom 60 billion rand over three years.

"Government is 100 percent in support of all of our options, and it's a question of balancing the sovereign investment grade rating and Eskom's investment grade rating and what is best for both," O'Flaherty said.