The Treasury said in its 2009 Budget Review, released on Wednesday, that the guarantees were in addition to a 60 billion rand, three-year direct loan to the company announced last year.
Eskom [ESCJ.UL], which is battling to meet growing demand, plans to spend 343 billion rand over five years to boost capacity but a global credit crisis had raised borrowing costs making it different for the company to raise finance.
Critics say years of under-investment in power generation and a rise in demand strained supply, leading to the power grid already collapsing in January last year.
The company has called for demand cuts, particularly from mines and industry, and has requested tariff increases to help meet planned spending.
The Treasury said it would guarantee existing bonds, the ES26 maturing in 2026, and the ES33 bond maturing in 2033, as well as floating rate notes maturing in 2026 and 2033.
The remainder of the guarantees would support the issuance of new local and international debt.
"If required, government would either repay the debt in its entirety or step into the shoes of Eskom and continue to make payments on Eskom's behalf," it added in a statement.
An annual limit, depending on cash flow requirements, would be set on the debt that the company could issue each year under the guarantees.
The Treasury also said it would consider guarantees for other state-owned companies, on merit.
"As the economic outlook and stability of these enterprises improves government will reduce its contingent liability exposure by issuing fewer guarantees and refinancing debt without such guarantees," it said.US EXPORT COUNCIL PROVIDES ASSISTANCE TO US COMPANIES SEEKING ACCESS TO HIGH GROWTH MARKETS OVERSEAS. http://usexportcouncil.com/
