Part 1 Revenue Application: Multi-Year Price Determination ... - Eskom

Overview of Multi-Year Price Determination
2013/14–2017/18 (MYPD 3)
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environment and the way that financial risk is assessed. It has also forced investors to
review their risk appetite, as reflected by an issuer‟s credit rating.
In the case of Eskom, debt capital markets (credit markets) are the only available source of
funding. This highlights the need for a supportive credit rating that reduces the cost of
funding and therefore the need to increase electricity prices in future.
Eskom has a R300 billion funding plan for the new build programme which extends to
2017/18, of which 75% has already been secured as at 1 April 2010 2012. This comprises
largely bond market funding (domestic and international), development finance and funding
support from export credit agencies. These sources of funding and their associated costs
depend on the credit profiles of Eskom and the country, as reflected by their credit rating.
Table 37: Funding plan to 2017/18 (R billion) updated as at 31 March 2012
Sources
Loan covenants
Given the funding sourced from development finance institutions or from banks underwritten
by export credit agencies, deterioration in the credit profile and rating will result in a breach
of certain loan covenants. This may result in cross-defaults across all related loans and will
negatively affect current and future funding of Eskom.
3.6.4 Conclusion
Funding
Sourced 1
Apr 2010- 31
Mar 2011
Secured to
date
Draw Downs
1 Apr 2010 -
31 Mar 2011
Draw Downs
Draw downs
1 Apr 2011 -
to date
31 Mar 2012
Eskom depends on credit markets for access to large volumes of funding. It is imperative for
Eskom to achieve and maintain an investment-grade credit rating. Less funding will be
available and the cost of funding will increase if Eskom‟s credit rating deteriorates.
Amount
supported
by Govt
Bonds 90 32.9 26.7 6.1 32.9 20.4
Commercial Paper 70 70 10 10 20 0
ECA's 32.9 32.9 7.5 8 15.6 0
World Bank 26.1 27.8 2.6 3 5.6 27.8
AfDB 21 20.9 3.9 2 5.9 20.9
DBSA 15 15 1 2 3 0
Shareholder Loan 20 20 20 0 20 20
Other sources 25 13.2 0 0.9 0.9 4.9
Totals 300.0 232.7 71.7 32.1 103.8 94.0
Percentages 77.6 44.6 40.4
(% of
R300bn)
(% of Secured)
(% of
Secured)