France is gearing up to be an early mover in providing financing for Eskom's restructuring, the country's ambassador to SA said this week.
Discussions within French government agencies have begun and there is keen interest to prepare proposals ahead of the state visit of France's President Emmanuel Macron to SA next year. SA is France's leading trade partner in sub-Saharan Africa.
Aurélien Lechevallier, the French ambassador, told Business Times on the sidelines of the SA Investment Conference on Wednesday: "We are working on different plans already because we feel there will be a need for co-operation. With our French development agency, we are ready to provide some kind of financial support to assist with the restructuring of Eskom."
Earlier this week, international credit ratings agency Moody's downgraded Eskom's credit rating further into junk, keeping the outlook negative. It highlighted "persistent risk to Eskom's capital structure and liquidity" despite government support and plans to restructure it for transparency and accountability, and mitigating future financial risk.
"Eskom faces significant challenges with complex problems that are not easy to solve", such as its R450bn debt, the agency said, adding that the timeline for its reorganisation was ambitious.
The government plans to hive off Eskom's transmission business by March 2020 from an initial deadline of June this year.
Costs for the restructuring in the medium term may increase, while there is uncertainty about the potential financial and operational benefits to Eskom, Moody's said.
Eskom, which resumed load-shedding on Thursday night, noted in a statement earlier in the week its "disappointment" over the Moody's downgrade, adding that it was continuing with a recovery plan to stabilise power supply and has continued support for its bonds in the local market. "We are cautiously confident that our debt obligations are not at risk," the utility said.
Lechevallier said finance to Eskom was likely to be structured as a multipartner loan. "It will not be France alone, it could be France with maybe Germany, maybe with South African development banks, maybe the Brics bank," he said.
But he said talks with SA would need to continue. "Our position is that we are expecting the SA government to clarify the need for international support and co-operation, but we want to be ready." The intervention would be a new chapter for co-operation between France and SA, he said.
France's state-owned power utility, Électricité de France, has an existing relationship with Eskom, primarily in the exchange of expertise, the ambassador said.
Last year, France gave Eskom a R1.5bn loan tied to renewable energy following previous funding to Eskom. SA's nuclear plant, Koeberg, was built with French technology in the 1970s.
About 400 French companies operate in SA. On Wednesday, French firms including Leroy Merlin, Alstom, Kasada, Saint-Gobain and Total pledged to invest a combined R20bn and create a further 3,000 jobs in SA over the next three to five years.
Lechevallier said the French firms were keen to expand on the African continent in collaboration with South African business.
"Our political vision is that we would like to define a joint partnership between SA and France on the whole continent. Imagine the strength of SA, your strong legitimacy, your regional influence, your talents."
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