Eskom confident it can raise funds for nuclear build programme

12th October 2016 By: Kim Cloete - Creamer Media Correspondent

Eskom confident it can raise funds for nuclear build programme

Eskom group executive for generation Matshela Koko
Photo by: Duane Daws

Eskom says it is confident that it can raise funding and operate the multibillion-rand 9.6 GW nuclear new build programme.

“Eskom has turned the corner. We’ve turned our operations around. We’ve tucked in our shirts. Today is better than yesterday and tomorrow will be better than today,” said group executive of generation Matshela Koko.

In terms of the announcement by Energy Minister Tina Joemat-Pettersson, the recommendation to Cabinet would be to designate Eskom as the procurer for the nuclear power plants for the nuclear new build programme.

The Department of Energy (DoE) said it would recommend to Cabinet that the South African Nuclear Energy Corporation (Necsa) become the procurer for the fuel cycle and multi-purpose reactor for the programme, while the DoE would continue as the programme coordinator for the nuclear build programme. 

Koko said he was confident Eskom could raise the required money.

He said the entity had been running a R70-billion funding programme for its coal-fired plants.

“Half of it goes to funding our existing build programme, and half to Medupi, Kusile and Ingula, and they are coming to the end of the build programme. We will sustain that new build programme so that we can fund nuclear,” Koko told Parliament’s Energy Portfolio Committee.

He said Eskom’s 2016/17 Corporate Plan indicated a continuing trend of financial and operational stability over the next five years. He expected that the trend would continue over the medium to long term. This would culminate in the company cash balances being in excess of R150-billion by year ten of the plan. This could be put towards the nuclear build programme.

Koko said Eskom was the only logical owner and operator of any new nuclear generation capacity. He said investor sentiment in respect of Eskom had improved significantly, enabling the execution of its borrowing programme of about R70-billion a year.

He said he was confident that investors would support the programme. The debt capital markets had responded positively to the financial support and structuring provided by government to the Renewable Energy Independent Power Producer Procurement Programme, with the current value of power purchase agreements at about R1.1-trillion.

Koko said Eskom had had significant successes in executing its current funding programme by using export credit agencies around the world. It had also proved that it had vastly improved its operational performance since 2014.

“We are in a position to keep the lights on. We have been able to do maintenance on plants that we’re required to do, and we’re no longer using diesel. We’ve reduced our spend of R1-billion a month on diesel to nothing this month.”

“Load-shedding is a thing of the past and is no longer part of our vocabulary. We don’t think about it.” 

He said Eskom had learnt valuable lessons from the building of its coal-fired plants.

“One of the biggest problems in delays in Medupi was that we did not plan properly and when we started digging the ground the conditions underground were different to what we expected.”

In September 2015, the Eskom board indicated its commitment to participate in the nuclear build programme and become the majority owner-operator for nuclear power plants.