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Kempton Park – Eskom’s build programme is funded through equity, retaining earnings and loans, said Marion Hughes, general manager of stakeholder relations.
Hughes was speaking during a question and answer session at the South African Chamber of Commerce and Industry (Sacci) convention in Kempton Park on Thursday. She was clarifying perceptions that debt fed through into tariffs.
“The Medupe and Kusile projects are not funded through tariffs, but through equity injection and loans,” she said. “Cost overruns are not the cause of tariff increases.”
Hughes also said that municipal debt was a concerning issue for the power utility. The top 20 defaulting municipalities account for 80% of debt, which was at R6bn at the end of March 2016.
There are payment plans to deal with this debt, explained Hughes. Whether these payment plans are effective or not is up for debate. However these plans have been more effective than programmes in the past. “Payment plans are the way to go.”
She added that credit control structures were in place, to “switch off” municipalities with outstanding debt.
The power utility is also looking at ways to advise municipalities on how to improve their revenue collection.
Nuclear build programme
Responding to a question about Eskom’s role as the procurer of the next nuclear build programme, Hughes said this decision by Minister of Energy Tina Joemat-Pettersson still needs to go to parliament. “As soon as we get clarity from cabinet we will be clearer what Eskom’s role is in it.”
READ: Eskom may take over nuclear job
Two sites have been identified for the programme, one in the Western Cape and another in Thyspunt in the Eastern Cape, she said. But nothing can be concluded until there is understanding of Cabinet’s view, she said.
The power utility recently stated that its prepayment loan to Tegeta Exploration and Resources has been repaid in full.
"We can confirm that the full amount of the prepayment to Tegeta has been recovered via coal delivered to Eskom by the end August 2016. During this period of time Eskom had sufficient security in place to cover any potential default by Tegeta," Eskom stated.
ALSO READ: Gupta's Tegeta 'repaid' prepayment loan - Eskom
Eskom added that prepayment is a common commercial practice used widely, and not unique to Eskom contracts. It is used in large projects, coal mining contracts and emergency supply contracts.
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