South Africa’s Eskom looks for funds

State electricity provider Eskom has appointed JP Morgan Chase and Swiss bank Credit Suisse to help raise money to fund a five-year expansion plan to address a major electricity shortage in South Africa. The shortfall has led to regular power cuts and disruption and heavy costs to business and industry.

The daily business newspaper Business Report says JP Morgan Chase has been appointed to draw up an overall funding plan for the electricity company, while Credit Suisse is to act as a transaction adviser for the sale of a stake in the Kusile coal-fired power station, which is under construction in Mpumalanga province.

The move comes after the World Bank approved a $3.75 billion loan for Eskom to build another coal-fired power plant at Medupi in Limpopo province as well as to develop major wind and solar power projects.

In 2009 the South African utility had to defer new construction projects and raise electricity tariffs after reporting a full-year loss of R9.7 billion for the 2008/2009 financial year due to a combination of higher coal, maintenance and labour costs.

Eskom is engaged in a R385 billion five-year project to expand its power generation capacity in a bid to meet the country