HomeIndustry SectorsFinance and PolicyGovernment doubles loan guarantee to Eskom

Government doubles loan guarantee to Eskom

The Medupi power
Cape Town, South Africa — ESI-AFRICA.COM — 28 October 2010 – The government has agreed to extend its loan guarantee to Eskom by R174-billion to a total of R350-billion, thereby securing the corporation’s build programme to 2017.

Revealing this to parliament’s Financial Committee here, Finance Minister Pravin Gordhan. confirmed that the facility had been agreed in talks with minister of public enterprises Barbara Hogan
Economists had been surprised yesterday that no provision had been made in his medium-term budget policy statement.

Gordhan said that this extension would enable Eskom to borrow on domestic markets at reasonable rates. “Money is cheap now,” he added, “and now Eskom would be able to complete the Medupi and Khusile power stations on schedule.

The government has resisted direct funding to Eskom, which has a long-term programme to build power stations at a cost of more than R1 trillion. It has agreed, however, to a subordinated loan of R60 billion, which it will repay only after all other commitments have been met.