AfDB lends Eskom $500m

Thu, 15 May 2008

Eskom - SA's power utility - in 2007 benefited from a US$500-million loan approved by the African Development Bank (AfDB) to beef up power supply.

This is according to the AfDB's 2007 annual report, released on Wednesday in Maputo at the Bank's annual conference.

It was through approval for the loan that in 2007 SA was ranked as the single largest beneficiary of total approvals by the Bank in the SADC region.

The loan was granted to Eskom with a repayment period of 20 years including a grace period of five years, the report said.

After two decades of improved power surplus, South Africa is experiencing significant power cuts.

The report said the bank's comparative advantage was "its ability to provide funding at longer tenors, which Eskom would be unlikely to procure through other investors.

"This unprecedented situation reveals the huge investment needed to sustain the country's economic growth rate and reach six percent growth by 2010, as well as to attain the Government's objective of universal electricity access by 2012," said the report.

Eskom intends to source 15 percent of its power from neighbouring countries through the construction of transnational high-voltage transmission lines, the report said.

"The program is therefore strongly aligned with the Bank's focus on fostering regional cooperation and integration, particularly in infrastructure," the AfDB said.

Out of the 12 SADC countries eligible for AfDB loans are Botswana, Mauritius, Namibia, South Africa, and Swaziland.

The others can only access the concessionary African Development Fund resources with restricted access to AfDB funds for private sector and enclave projects.

Zimbabwe is a blend country with access to funds from both the AfDB and ADF windows.