Johannesburg — ESKOM's cash crisis has forced it to consider selling a 30% stake in its R142bn Kusile power station -- which could secure it up to R40bn in private equity.

The move towards partial privatisation of projects, which has been identified as a missing link in Eskom's search for solutions to its financial woes, gives it a new source of funding.

Selling off a stake in Kusile, a coal-fired plant to be built in Mpumalanga, is among the changes in Eskom's final application for a tariff increase from April next year to March 2013.

It has applied for a 35% tariff increase every year for the next three years, instead of the 45% it initially asked for.

The lower increase means it will have funding shortfalls.

Eskom's traditional sources of funding are tariffs, borrowings and government support, so selling off a stake in a power station is a major departure.

Acting chairman Mpho Makwana said yesterday that it was part of a shift in Eskom's business strategy. But the move is also likely to reinvigorate the debate about SA's ability to attract private investors to the sector.

Despite its clear policy intentions, the government has so far failed to lure independent power producers to the local market.

Eskom's next hurdle will be to attract private investors. This, say analysts, could prove difficult as SA's electricity prices are still considered too low to be attractive.

Eskom yesterday announced a raft of measures, which included the 30% Kusile sell-off to a private equity partner within 24 months. Makwana said the Kusile power station and the Sere wind power station would be delayed by a year, which would make power supply tight over the next few years.

Eskom also recommended that a new nuclear plant and the Department of Energy's independent power producer programme for peaking plants be delayed by two years. The department had planned to introduce private- sector peaking power generation by building two power plants with a combined generating capacity of more than 1000MW near Port Elizabeth and Durban.

Eskom also recommended, in its tariff application to the National Energy Regulator of SA (Nersa), that the next coal-fired power station be replaced by independent power producers.

This puts to rest speculation about whether Eskom would take on the responsibility of building another power station, while it is battling to find money for its present major projects.

Eskom said it was hopeful of saving R12,6bn from its operations and primary energy.

But the savings from primary energy depended on the government repairing roads on which Eskom transports coal from mines to its power stations, which would save Eskom at least R10bn.

Makwana said he was confident the government would carry out its responsibilities.

"I have no doubt that there is full alignment between all key players ... I feel that we are adequately aligned," he said.

The revised application would leave Eskom with a cash shortfall of R14bn in the 2011-12 financial year and R7,9bn in the 2012-13 financial year, which it said it would address by other means.

In the initial application, the shortfall was R30bn.

"Revising our tariff application 10% or 29c per kilowatt hour down is a reflection of our sensitivity and responsiveness to the social and economic needs of the country.

"However, we have had to ask ourselves pertinent questions as an organisation in terms of our role in the energy industry and our capacity to carry SA's energy needs into the future.

"Eskom cannot do it all alone, hence the application comes with significant challenges that we have to manage together as a country," Makwana said.

The government should clarify policy on nuclear and renewable energy and come up with an electricity plan for the country for the next 20 years, he said.

Energy analysts said yesterday that in order to attract private investors, electricity prices would have to rise drastically.

"Do not expect investors to jump at the opportunity," said Frost & Sullivan's Cornelis van der Waal . His view was shared by Econometrix economist Russell Lamberti.

Trade unions slated the 35% increase as too high. Solidarity said it would oppose any tariff increase, "until such time as Eskom has finalised an adequate financing model for the expansion of its capacity".

Business Unity SA said the requested increase had to be "critically interrogated".

Nersa is expected to announce its decision in February.