SOUTH AFRICA: GOVT SAYS TO CONTINUE SUPPORTING CASH-STRAPPED POWER UTILITY ESKOM

CAPE TOWN, The South African government will continue to provide support to cash-strapped power utility Eskom so as to strengthen the state-owned entity, the presidency said.

This came after President Jacob Zuma's special advisor on energy, Silas Zimu, indicated that the government would abandon the energy parastal, which has been gripped by allegations of corruption and poor governance.

Addressing a wind energy conference in Cape Town earlier last week, Zimu said Eskom was "going down and under very, very fast" as it was wasting billions of rand constructing power stations to supply electricity for which there was no demand.

The power parastatal is facing a cash crunch, holding just above half its funding requirements for the current financial year, Zimu said.

Zimu said breaking up the power utility had been in discussion since 1995.

His remarks raised concern about the fate of Eskom, the largest producer of electricity in Africa.

On Friday, rating agency Fitch put Eskom's long-term local currency issuer default ratings, or IDR, and its unguaranteed local currency senior unsecured ratings of "BB " on Rating Watch Negative (RWN).

Fitch's move fueled the belief among some that the utility has become the biggest risk to South Africa's economy.

The presidency, however, objected to this view.

Eskom is one of the country's central engines for economic growth and development, presidential spokesperson Bongani Ngqulunga said in a statement.

Zimu's remarks are his personal views and do not represent the views of Zuma, the Presidency or government, Ngqulunga said.

He said Zimu was addressing the wind energy conference in his personal capacity.

In a related development, Eskom said it is confident that the liquidity challenges it faces will be resolved and that the funding initiatives planned until the end of the financial year will alleviate the pressure.

"We remain focused on improving corporate governance to address liquidity challenges in the near term to avert a downgrade," Eskom Interim Group Chief Executive Sean Maritz said.

Eskom is among the top seven utilities in the world in terms of generation capacity and among the top nine in terms of sales. The utility not only provides more than 95 percent of electricity consumed in South Africa but also supplies power to some neighboring countries.

Source: NAM NEWS NETWORK