Eskom says its board will approve an annual borrowing plan for the transmission unit and that will be in the form of inter-company loans
Eskom said it will give the transmission unit that it is transforming into a separate entity a R39.9bn loan to make sure it can complete projects and be financially viable.
“Eskom is extremely careful to not put its non-sovereign guaranteed creditors in a disadvantageous position,” said Okan Akin, a credit analyst at AllianceBernstein in London who listened to a call Eskom held for creditors on Thursday. “They seem to have come up with a very intricate structure to mitigate any structural subordination risk,” he said referring to the danger that Eskom’s own creditors would only get paid after obligations to the subsidiary’s creditors had been met.
“The real elephant in the room is Eskom’s unsustainable debt load,” Akin said. “Without finding lasting solutions to these issues, debt transfer will only give them temporary respite.” The company is expected to buy 218,000 gigawatt hours of power annually, with 77% of that coming from Eskom power plants, 19% from independent generators and 4% from imports. In turn it will export 5% of the 212,000GwH it expects to sell and the rest will be sold within SA.
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