Eskom secures $500m AfDB loan

11 November 2008

State power company Eskom has secured a 20-year loan for US$500-million (about R5.08-billion) from the African Development Bank (AfDB) to fund a capital expansion programme that seeks to increase South Africa’s electricity generation capacity and strengthen the country’s transmission and distribution grid.

The loan agreement, which was signed in Johannesburg this week, is the largest ever granted by the AfDB’s private sector operations division.

Eskom is spending billions on rehabilitating South Africa’s electricity network and doubling generation capacity to support economic growth in the country and region.

In a statement this week, AfDB vice president Mandla Gantsho underscored the importance of the development bank’s commitment to assisting its regional member states in improving their electricity capacity.

“By supporting Eskom’s expansion programme, the AfDB will seek to address not only the energy problem in South Africa, but also the whole sub-region, as Eskom is expected to play an important role in some key regional programmes,” he said.

Fostering growth

In September, Eskom began construction on the Kusile coal-fired base load power station near Witbank in Mpumalanga province, while work on the Medupi coal-fired base load power station near Lephalale in Limpopo province began in April.

The first of Medupi’s six generating units will be commissioned by early 2011, with the last unit scheduled for commissioning by January 2015. The first of Kusile’s six generating units is scheduled for completion by 2013, followed by the completion on an additional unit after every eight months.

In October, Eskom released a list of 23 national and international developers to be unconditionally pre-qualified to produce electricity under the utility’s multi-site base load independent power producer programme.

“The extent and timing of the AfDB loan reinforces the extent to which institutions based on the continent can provide support which fosters growth,” said Eskom finance director Bongani Nqwababa.

“The foundation for this relationship is all the more entrenched due to the two institutions’ critical developmental mandate both in South Africa and the region.”

To date, AfDB has approved a total of nine private sector operations amounting to approximately $1.2-billion in South Africa, and two regional projects amounting to $105-million.

SAinfo reporter

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