The Jeffreys Bay wind farm. Picture: The Herald
The Jeffreys Bay wind farm. Picture: The Herald

Eskom is yet to sign loan agreements with the New Development Bank and the African Development Bank secured in 2016, both of which depend on a commitment to the expansion of renewable energy.

In both cases, Eskom says negotiations are on track and will be concluded shortly.

Last week, after a standoff of more than six months during which it said it would not sign any new agreements with independent power producers, Eskom said it would sign purchase arrangements with all projects already approved.

Eskom also said it remained committed to the construction of its own 100MW concentrated solar power (CSP) plant in the Northern Cape to which it agreed as part of the condition for a $3.75bn loan from the World Bank in 2010.

A $180m loan from the New Development Bank (NDB) — formerly known as the Brics Bank — was approved in April 2016 specifically for investment in transmission lines and the connection of electricity capacity from renewable energy projects. Eskom said this week it had agreed with the NDB to time lines for the conclusion and signing of the agreement.

The R20bn loan facility extended by the African Development Bank in July 2016 has also not yet been utilised.

Eskom said it was "in a process of fulfilling conditions for utilisation of the loan".

The terms and conditions had not been renegotiated and the bank had not expressed any concern regarding Eskom’s policy on renewable energy, the company said.

Two other loans secured by Eskom — one by the World Bank and another by Germany’s KfW Development Bank — have also hinged on Eskom’s commitment to renewable energy. Conditions attached to the World Bank loan included a $260m allocation to develop a 100MW wind farm and 100MW CSP plant.

While Eskom built the Sere wind farm, it has not gone ahead with the CSP plant. CSP is by far the most expensive of all renewable technologies.

Eskom said this week it would honour all its obligations under the World Bank loan, including the CSP project.

The World Bank confirmed that it had been assured by Eskom and the government of their commitment to renewable energy development.

"The commencement of the CSP component has not yet begun, but it remains part of the project," the bank said.

Jan Martin Witte, director of KfW Development Bank’s Pretoria office, said its $339m loan to Eskom in 2015 was specifically for the "modernisation of its transmission and distribution system to be able to connect renewable sources of energy to the power grid".

"We are happy and confident that the projects we are funding are going ahead…. However, as a lender, we have a strong mandate to fund renewable energy. If there are no future rounds of renewable energy procurement, then the question for us would be whether to continue to do business with Eskom," he said.

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