Eskom sees no winter power cuts

The electricity grid nearly collapsed in January as Eskom battled to meet demand. The country's gold and platinum mines were shut for five days by the power crisis, sending metals prices soaring on world markets.

"I'm confident the entire winter will go without any load shedding (power cuts) whatsoever," outgoing Eskom chairperson Valli Moosa said at the group's annual results presentation.

Chief executive officer Jacob Maroga said the power system had stabilised since May but was "not out of the woods" adding that Eskom had a reserve margin of 6% compared to a target of 15%.

"Our number one priority is to keep the lights on," Maroga said. "Our second priority is to execute the big expansion strategy and secure funding.

"We are going to be borrowing a lot of money, in addition to what we have received in increased power tariffs and what the government has chipped in," he added.

Eskom said it would borrow up to R150bn from local and international markets for capital expansion, and had budgeted R46bn in the 2008/9 financial year for that.

Revenue in 2007/08 rose to R44.4bn from R40bn the previous year, and Eskom also said its full year electricity growth sales were at 2.9% compared to 4.9% previously.

Coal costs increased by R5bn for the period, and the firm was currently using 21% of short-term coal contracts compared to 2 percent in 2001, pushing up coal costs.

Eskom has a total net generating capacity of 37 761 MW from 11 operating coal-fired power stations, and a further 2 300 potentially available from two mothballed plants which are currently being recommissioned.

The country's reserve margin currently was at six percent against a target of 15%.

- Reuters