Eskom secures $1.5bn loan from China
This is the second tranche of a $5bn facility agreed with China Development Bank in 2016
Eskom signed a $1.5bn (R19.6bn) loan agreement with China Development Bank on Thursday, to partly finance its Medupi coal power plant, acting CE Johnny Dladla said on Thursday.
The loan is the second tranche of a $5bn funding facility Eskom is seeking, after signing a $500m credit facility with China Development Bank in 2016.
"This loan will also aid us in ensuring that we complete the Medupi project and ensure security of energy supply," Eskom’s acting CEO Johnny Dladla told reporters.
The power utility, which has in the past been forced to impose power cuts due to insufficient supply, is scrambling to revamp its ageing power plants.
Once completed, Medupi is expected to be the largest dry-cooled coal-fired power station in the world and will add 4,800MW to the grid. But the facility is over budget and years behind schedule.
Eskom chief financial officer Anoj Singh said the Chinese loan would be paid back over 15 years.
He expected Eskom’s debt to peak at R500bn, up from R350bn currently.
To date Eskom had secured 77% of this fiscal year’s funding requirement, Dladla said, and expected that it would meet the required funding for the year.
Singh also said Eskom saw significant appetite from international investors for the firm’s bonds and the utility could tap the market for between $1bn and $1.5bn in sales in the next six months.
However, he said governance issues at the utility had affected the firm’s plans to secure funding.
"We’ll probably look for about $1bn to $1.5bn in the next six months depending on the appetite," he told Reuters.
Eskom has been in a leadership crisis, with Brian Molefe’s return as CE overturned. The former acting CE, Matshela Koko, is involved in a probe of alleged nepotism, and several board members, including chairman Ben Ngubane, have resigned in recent months.