Image credit: Eskom

Eskom and KfW, the German Development Bank on behalf of the German government, have signed a $100 million (R1.35 billion) loan facility to support further investments in the transmission network in the Northern Cape.

The objective is to facilitate the grid integration of renewable energy independent power producer (IPP) projects under the recently-signed power purchase agreements (PPAs).

Eskom and KfW’s cooperation has been agreed upon by the two governments.

“The successful conclusion of this agreement between Eskom and KfW validates the bank’s continued commitment towards Eskom and it is an indication of the strong partnership and coorporation between Eskom and KfW,” said Phakamani Hadebe, Eskom’s Group Chief Executive.

Hadebe added: “The facility demonstrates the improved market sentiment and confidence in the ability of the Eskom’s leadership to direct the company on the correct path to recovery and sustainability. Furthermore, integrating more renewable sources of energy into the grid will go a long way in helping to reduce South Africa’s CO2 emissions, driving Eskom towards it’s targeted goals,”

Enhancing network reliability

This funding will also allow for the continuation of the second phase of capacity and reliability improvements in the areas of Harrismith in the Free State and the Greater East London region in the Eastern Cape; these projects will largely enhance network reliability and load-growth.

The signing of this loan facility is a positive contribution towards the successful execution of Eskom’s R72 billion funding requirement for FY2018/19; the loan forms part of the first new funding that Eskom intends signing with Developing Finance Institutions in this financial year.

With the introduction of South Africa’s Renewable Energy Independent Power Producer Procurement Programme , KfW extended a further loan of R3,9 billion to Eskom in March 2015, to facilitate renewable energy grid integration as well as overall grid strengthening through improvements to the capacity and reliability of the transmission network.