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Eskom not desperate enough to issue global bond

Eskom is not desperate to raise money through the sale of international bonds.

FILE: President Zuma was joined by Minister of Public Enterprise Lynne Brown and Eskom acting Chief Executive Brian Molefe as he officially opened the Medupi Power Station Unit 6,  Liphalale, Limpopo on  30 August 2015. Picture: GCIS.

JOHANNESBURG - South Africa's utility Eskom is not desperate to raise money through the sale of international bonds, its chief executive said on Tuesday, as the firm has enough funding to build its new coal-fired power stations.

Eskom, which reported a 22 percent rise in half-year profit, is building the coal-fired Kusile and Medupi power stations to ease an energy crunch in Africa's most advanced economy.

"We don't have to do a global bond issue. We will do a bond issue when market conditions are right," state-owned Eskom's CEO Brian Molefe told reporters.

"We will go into the market but not in a desperate fashion."

Eskom said last week it could raise up to $1 billion through an international bond but did not give a time line.

Debt rating agency Standard & Poor's cut Eskom's credit ratings to junk in March, which could raise its borrowing costs.

Eskom had secured funding of R46 billion by the end of the six-month period to September against a year-end target of R55 billion, the company said in a statement on Tuesday.

The government had also provided a further R10 billion in equity, with an additional R13 billion expected by March 2016, the company said.

The rand has fallen sharply this year, making it tougher to pay back debt denominated in dollars and Eskom said in September it can fund its new power stations without borrowing from the markets.

The utility, unpopular among South African consumers after introducing regular power cuts late last year to prevent the grid from collapsing, said that it had more room for maintenance since the first unit of the Medupi power station started contributing electricity earlier this year.

Eskom will conclude talks with Anglo American over coal supply to its Kusile power station in the next three months, group executive Matshela Koko said on Tuesday. The plant is still to be completed.

South Africa's GDP contracted in the second quarter of this year with power supply issues cited as one of the reasons manufacturing struggled.

Over the past three months power cuts were limited to only a few hours in total, compared to daily, allowing growth to recover in the third quarter.