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South Africa: US$ 500 million AfDB loan for ESKOM

South Africa’s national electricity company, Eskom Holdings Limited, will benefit from the biggest loan ever granted by the Private Sector window of the African Development Bank (AfDB). The US$ 500 million program loan approved by the AfDB Board of Directors will help enhance the capacity of the South African utility through investment in generation, transmission and distribution infrastructure.
After two decades of power surplus, South Africa is experiencing for the first time a closely matched supply and demand of power. Currently the utility’s reserve margin is between 8% and 10% down from 25% in 2001. This unprecedented situation has revealed the significant investment Eskom needs to make to align its capacity growth with the South African Government’s Accelerated Growth Initiative (ASGISA). The investment program amounts to ZAR 150 billon (approximately USD 20 billion) over a period of 5 years and is intended to support the ASGISA targeted growth rate of 6% by 2010.

“The capacity expansion program is a significant challenge for Eskom, but the company has the capacity to meet the objectives set by the government and has furthermore already taken appropriate measures to address those challenges,” says Tim Turner, AfDB Private Sector Department Director.

“Our investment program will ensure security of supply, foster sustainable development and promote the development of the South African industry”, says Jacob Maroga, Eskom Chief Executive.

Regarding electricity generation, Eskom’s investment program will add in excess of 8,000 MW to the grid before 2012. Eskom’s 5 year investment program also includes major transmission projects in excess of ZAR 15 billion. These projects include the construction of 1500km of 765kV lines in order to strengthen supply to the Western Cape. In addition, Eskom will continue to invest in the refurbishment and upgrade of its distribution network.

Since 1997, the Bank has approved a total of eight private sector operations amounting to approximately USD 560 million in South Africa, and one regional project covering South Africa and Mozambique.

Additional information: AfDB
News date: 07/08/2007

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