Eskom CEO Andre de Ruyter. Picture: FREDDY MAVUNDA
Eskom CEO Andre de Ruyter. Picture: FREDDY MAVUNDA

Debt-stricken power company Eskom told investors it does not need to approach the government for more support, even as a Covid-19-related national shutdown slashes revenue.

The company needs to raise R89bn this year and R56bn of that will come from an existing state bailout, CEO Andre de Ruyter and CFO Calib Cassim said on the call, according to investors who listened to it.

Eskom spokesperson Sikonathi Mantshantsha declined to comment.

“After accounting for the R56bn of bailout funds committed this year, Eskom management estimates that it has R31bn of funding needs for this year,” said Ali Dhaloomal, a London-based credit research analyst at Bank of America. “Eskom doesn’t see the need to ask for additional state support at this point of time.”

About 40% of the remaining funding required has been committed by development finance institutions; the balance will come in the form of structured products from banks, export-credit agencies and the sale of domestic bonds, the people said. They asked not to be identified as the call wasn’t open to the media.

In a discussion dominated by investor concerns about cash flow, the executives said the company could withstand a few more weeks of a lockdown if it was extended. An estimated revenue loss of R4bn is expected for the three-week lockdown that began March 26, they said.

The plunge in electricity demand due to the mandatory closure of mines and factories has allowed Eskom to boost maintenance to 9,500MW of capacity from 4,000MW. However, longer-term closures of plants for deeper maintenance will have to wait until the lockdown is lifted because the work would violate social distancing guidelines.

Yields on Eskom’s dollar bonds stayed lower after dropping earlier for the first time in eight trading days amid a resurgence of global risk appetite. The company’s $1.25bn of 2025 securities gained 1.8% to 70.3c on the dollar, driving the yield down 48 basis points to 16.22%.

Bloomberg

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