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Govt worried about Kusile

Apr 22 2010 08:03 Jean-Marie de Waal

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Cape Town - Concern about where the money for Eskom's second new coal-fired power station, Kusile in Mpumalanga, will come from could force National Treasury to increase its existing R176bn government guarantee for Eskom.

This would facilitate the power utility's access to loans.

Sake24 has ascertained that although the upward adjustment might be fairly small, it is one of the few options to ensure electricity security.

Medupi, which is being built in Limpopo, is probably okay for now but Kusile is a problem, Department of Public Enterprises deputy director-general Chris Forlee told the select committee on public enterprises on Wednesday.

Construction of Kusile, which needs to be completed by 2014, is a year behind schedule owing to a shortage of funds.

Eskom recently announced that it was looking for partners in building Kusile. Current estimates are that the power station will cost R142bn. A 30% or 39% stake could possibly be sold to a partner.

An adviser appointed by an inter-ministerial committee is looking into such a partnership with the private sector.

Although private investors are uncertain whether an investment in Kusile will deliver a good return, Forlee believes it will.

According to him private investors in Kusile could enjoy returns of 12% to 15%, depending on how large a stake in Kusile Eskom is able to sell.

- Sake24.com

eskom  |  kusile
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