Eskom to spend $23.5bn to construct new power plants in South Africa

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Power utility company Eskom has denied allegations that its under pressure to secure money from donars so as to finance the $23.5-billion five-year expansion plan.  This was said by the company’s chief executive on Tuesday.

Eskom is building new transmission lines and new power plants in South Africa to upgrade a power grid that nearly collapsed in 2008 and was forced to undertake controlled blackouts.

“Our funding for last year is complete and most of the funding for this year is done,” Eskom CEO Brian Molefe told reporters. “We never issue less than benchmark which is anything above $500 million, so it can be $750 million or $1 billion.”

He said the timing for the project would depend on market conditions, and added that the successful pricing of a 10-year dollar bond by the National Treasury in April was a good shot.

Eskom is putting up three new power plants that are expected to add 5 620 megawatts (MW) to the network by 2018. Minister Lynne Brown, whose department is in charge of the power utility, briefed parliament that power supply had stabilized, adding that South Africans for the longest time have had their lights uninterrupted and load shedding has become a rare case.

She said the rest of Africa was a key strategic growth area, with Eskom hopping for new business opportunities this financial year in Mozambique, Democratic Republic of Congo and Uganda.

Brown also said that Eskom, which provides almost all the power to Africa’s most industrialized economy from mainly coal-powered plants, has been paying  way above the inflation prices to secure coal, despite being the main buyer of the commodity.

Eskom gets 51% of the coal from global miner and coal traders   Glencore, Exxaro, South32 and Anglo American.

To cut on the cost of coal for Eskom, CEO Molefe said the utility was busy negotiating its long-term coal contracts.