26 August 2010
South African state power company Eskom has signed two loans with Deutsche Bank and Credit Agricole, worth approximately R1.6-billion, to fund construction at its Ingula pump storage scheme and Medupi power station.
On Wednesday, Eskom said it had concluded a loan worth approximately R1-billion with Deutsche Bank which will be used to fund 85% of the turbine pump contract for the 1 352 MW Ingula pump storage scheme, which is situated on the boundary of KwaZulu-Natal and Free Sate.
The second loan agreement, of approximately R600-million, arranged by Credit Agricole Corporate and Investment Bank, will be used to fund the 4 800 MW Medupi power station construction in Lephalale, Limpopo.
Eskom financial director Paul O’Flaherty pointed out that the company was a key contributor to the growth of the South African economy. “Funding is a critical enabler for the successful execution of the capacity expansion programme and export credit agency backed funding compliments our other sources of funding in the Eskom funding plan.”
Kusile still on track
There are no plans to cancel the Kusile Power Station project, Eskom said, following media reports that the station, which is being built in Emalahleni, Mpumalanga, was going to be cancelled.
Eskom said that it was still committed to building Kusile and that it had been in discussions with the government to explore various funding options for the project.
“Eskom is on record saying that in order to plug the gap in electricity supply over the next few years, South Africa needs new base-load power stations like Medupi and Kusile. Funding to complete the Medupi station has recently been approved by the World Bank,” Eskom said.
In April, the World Bank announced that it would grant the utility a US$3.75-billion loan to co-finance the 4 800 MW Medupi coal-fired power plant in Limpopo as well as the country’s first large wind and concentrated power projects.
“We are working hard to resolve the funding issue because there is no viable option to replace Kusile,” O’Flaherty said. “Without the additional power from Kusile from 2014, there could be constraints on South Africa’s economic growth.”