11 November 2008 – Eskom has signed a US$500 million, 20 year loan with the African Development Bank (AfDB) to fund part of its US$43 billion expansion programme.
“The signing of the loan agreement comes at a time when Eskom needs to meet its most significant challenge yet. The next five years remain critical for Eskom through our capital expansion programme to contribute and provide a broader platform for a striving South African economy. We are likely to be in this expansion phase for the next two decades,” said Bongani Nqwababa, Eskom financial director.
Eskom, for the purposes of the loan, were considered a private entity, and are the now the recipients of the largest loan granted granted by the private sector division. “That’s why we did not insist on a government guarantee in our dealings with Eskom,” AfDB infrastructure private sector and regional integration vice-president Mandla Gantsho said.
“Eskom is, without a doubt, the most credit-worthy utility in Africa, with its investment credit ratings,” he continued.
According to Eskom spokesperson, Fani Zulu, the loan will be available over a six month period and that the money would be used toward the company’s expansion programme and new build projects, such as Medupi power station. He was unwilling to discuss the deal in any finer detail.
The loan, which took approximately 18 months to negotiate, is viewed as an offshore loan, as it is in US dollars.