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Eskom, AfDB sign $500m loan to help fund expansion

State-owned electricity producer Eskom on Monday signed a $500-million, 20-year loan with the African Development Bank (AfDB), as part of its capital raising plans to fund its R343-billion investment programme.
This was the largest ever loan granted by the private sector division of the AfDB, and came at a time when the utility was finding it increasingly difficult to lock-in foreign capital, and was intensifying its capital raising activities closer to home.

“The signing of the loan agreement comes at a time when Eskom needs to meet its most significant challenge yet. The next five years remain critical for Eskom through our capital expansion programme to contribute and provide a broader platform for a striving South African economy. We are likely to be in this expansion phase for the next two decades,” said Eskom financial director Bongani Nqwababa.

Eskom CEO Jacob Maroga added that he hoped that this loan agreement was the start of a longer partnership between the two entities.

AfDB infrastructure private sector and regional integration vice-president Mandla Gantsho noted that the AfDB viewed Eskom as a private sector entity. “That’s why we did not insist on a government guarantee in our dealings with Eskom,” he said.

“Eskom is, without a doubt, the most credit-worthy utility in Africa, with its investment credit ratings,” added Gantsho.

Additional information: Web site AfDB.
News date: 10/11/2008

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