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Eskom upgrades to cost R400bn

Nov 23 2011 12:43 Reuters

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Johannesburg - Power utility Eskom is likely to run up R400bn of debt over the next three years as it pays for upgrades to keep South Africa's lights on, chief executive Brian Dames said on Wednesday.

In a briefing accompanying the utility's interim results, Dames also said the power supply would remain tight until the first units of two major new power plants started to come on line.

“We have a very constrained power system,” Dames said.

South Africa's grid, which almost collapsed in 2008 in a supply crunch that hit economic growth, is feeling the strain at the moment because of routine maintenance, but Dames said 385 megawatts would be added to the system by the end of the year.

The first phase of the massive 4 800 MW Medupi coal-fired power station could be on line from May 2013 if all contractors meet their obligations, Eskom chief financial officer Paul O’Flaherty told the same briefing.

Eskom has had to impose hefty tariff increases over three years to pay for new power stations and improvements to the grid after two decades of underinvestment.

Those hikes have started to show through in increased revenues, with the firm reporting receipts of R63.8bn in the first six months of the year, up from R51.1bn from same period last year.

That represented a profit of R12.81bn, from R9.5bn a year ago.

Eskom said its surpluses would be reinvested or used to pay down debt.

 
eskom  |  power supply  |  medupi power station
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