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Projects and Energy Weekly Snippets

19 June 2017

South Africa

Weekly projects and energy updates in South Africa

Moody’s downgrades Eskom 

Moody’s lowered Eskom’s credit rating to the second rung of junk status on Tuesday night.

Moody’s reduced Eskom’s rating from Ba1 to Ba2, which equates to BB in the nomenclature of S&P Global Ratings and Fitch Ratings.

Moody’s follows S&P’s move on 7 April when it cut the power utility’s credit rating to B+, four rungs into junk and into the "highly speculative" band of single Bs from the "noninvestment grade" of double Bs.

Business Day, 14 June 2017

NPC commissioner calls for energy-planning overhaul

A member of the National Planning Commission (NPC) has pointed to serious shortcomings in South Africa’s current energy planning processes and has called for future plans, including the highly contested Integrated Resource Plan (IRP) for electricity, to be compiled by a new independent technical entity with no interests in the future power generation mix.

Speaking at Wits Business School this week, Jarrad Wright reported that an NPC reference group had been established to consult on the future of energy planning in South Africa. Meetings would be held with various stakeholders in the coming months with the intention of arriving at a “more defined position” on the approach the country should adopt.

It was nevertheless already apparent that priority had to be given to the periodic “publishing and promulgation of strategic national energy plans” and that these plans should be consistently updated to take account of changing realities.

Engineering News, 14 June 2017

Eskom confirms tariff application, says necessary for financial sustainability

Eskom should achieve financial sustainability in seven years, but that was conditional on the National Energy Regulator of South Africa (NERSA) agreeing to tariff increases of some 20%, the utility’s chief financial officer said on Wednesday.

“We believe we should be able to navigate Eskom to the point where it is financially sustainable. It should happen in the next seven odd years but that will depend on the tariff increases,” Anoj Singh told a select parliamentary committee on communications and public enterprises.

Singh did not dispute leaked reports that Eskom has applied to NERSA for tariff increases of 19.9% for private consumers and 27.3% for bulk buying municipalities from July 2018.

Engineering News, 14 June 2017

I resigned for personal reasons, says Ben Ngubane

Former Eskom board chairman Ben Ngubane says he has resigned for personal reasons and not because he is running away from links to the Gupta family or a parliamentary inquiry into the power utility.

Business Day, 13 June 2017

The above reflects a summary of certain news articles published during the preceding week. It is not an expression of opinion in respect of each matter, nor may it be considered as a disclosure of advice by any employee of Hogan Lovells.

For more information contact Charles MaraisPhilip van Rensburg or Mzimasi Mabokwe

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