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Eskom’s liquidity is expected to improve in the 2016/17 financial year following a $500m credit facility agreement signed with China Development Bank (CDB).

On Monday, Eskom announced a recent financial milestone – signing an inaugural $500 million (ZAR7 billion) credit facility agreement with China Development Bank (CDB).

The signing ceremony was held at Eskom Megawatt Park in Sunninghill, Johannesburg.

A company statement noted that the facility will contribute towards Eskom’s current capital expenditure programme.

Credit facility foster investor confidence

Eskom’s chief financial officer, Anoj Singh, said: “The successful execution of this credit facility increases the funding secured for financial year 2016/17 to ZAR51 billion, meaning we have secured 75% of our ZAR69 billion funding requirement.

“We appreciate the Bank’s support and look forward to concluding further facility agreements.’’

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Eskom’s CEO Brian Molefe. Pic credit: BDlive

Eskom’s group chief executive, Brian Molefe, commented: “We are pleased to see the conclusion of this first agreement with CDB, and lay the platform for future co-operation with our Chinese partners. The conclusion of this agreement continues to demonstrate investor confidence in Eskom and South Africa; notwithstanding the recent volatility experienced in the local debt capital markets.

“This loan will also aide us in ensuring that we complete the current capital expansion programme and further stabilise Eskom’s liquidity position,” Molefe added.

BRICS partnership

Both China and South Africa are part of the BRICS partnership with other countries including India and Brazil.

BRICS is a grouping acronym of these countries involved, which are all deemed to be at a similar stage of newly advanced economic development.

Molefe said “as fellow BRICS countries, we have committed to leverage off each other’s strengths which leads to prosperity of all.”

He added: “A prosperous community, organisation or country can only continue to thrive if there is an inherent belief from its people, employees or citizens, or even stakeholders that any cause/entity is worth committing to.”

Eskom’s CEO further noted that the loan will be a catalyst of many projects and developments, which he added will lead to the prosperity of the South African nation.

“We want to ignite industries and entrepreneurship. This partnership is a direct catalyst for growth. It allows us to meet the growing demands of our nation as it is expected that electricity demand will increase by about 1% every year,” he said.