While the global financial crisis could push Eskom's lending costs up by a further R120-billion in interest, global growth consultants Frost & Sullivan (F&S) on Wednesday said the crisis could indirectly result in projects being brought online sooner than anticipated.

F&S said the positives that could result from the crisis included the changing dynamic of the supply side of the market.

Long lead times

"The long lead times on critical equipment such as turbines could decrease, hence reducing overall project times," said F&S.

But it did caution that this was, however, not going to happen immediately but rather probably only become a reality in 12 to 18 months.

"A second potential benefit could be that companies that are currently constructing power plants could see a reduction in input costs as the prices of steel and cement decrease on the back of lower demand," suggested F&S's energy programme manager, Cornelis van der Waal.

"Again, the impact of this will most likely only be felt in six months from now," he said.

Van der Waal also suggested that the potential existed for investors to disinvest from turbulent markets in Europe and America and seek investment opportunities in economies that had not been as severely impacted by the credit crisis.

These economies included the emerging markets.

But he warned that the likelihood of this occurring was low.

Forking out

F&S have warned that the lack of funding in the global financial markets and the weakening of the South African rand could result in South African power utility Eskom having to fork out an additional R120-billion in interest.

"The cost of borrowing is increasing for Eskom and thus the company will have to borrow less and still pay more interest," said Van der Waal.

With liquidity challenges on top of the credit rating reduction, the cost of debt could potentially increase by between two and five percent.

Practically, this means Eskom could have to pay an additional R50-billion to R120-billion in interest, F&S said.

I-Net Bridge