South Africa’s Eskom, an institution that mining companies are looking up to to provide a reliable source of power, has ruled out the option of issuing bonds to raise $21bn to fund new power plants, the organisation’s Chief Executive Officer,
Molefe told Reuters during the sidelines of a function that the company won’t go on the bond marker as the credit market was not favourable. Instead, he said, the power utility in the process of negotiating with banks and development financial institutions on multi-lateral loans.
In addition, Molefe said that the company was not losing sleep as it has sufficient capital to cover its operations in the 2016 and 2017 fiscal years.
Eskom has only been granted 9% instead of 15% of the tariff hike it did propose to Nersa (National Energy Regulator of South Africa), and it desperately looking for funds to shore up power reserves by 5 620 megawatts. Its ability to secure funding might be compromised as it faces a potential credit rating downgrade by Moody’s due to poor financial management, which would mean borrowing at a higher interest rate as it would be classified a borrower with high risk of defaulting.