DBSA loan 'proof of confidence in Eskom'

Thursday, November 4, 2010

Pretoria - The Development Bank of Southern Africa's R15 billion loan towards Eskom's build programme is a vote of confidence by the bank in the power utility, says Eskom Chief Executive Brian Dames.

"It will help us to provide South Africa with the power stations and transmission infrastructure it needs, while ensuring that Eskom remains financially sustainable," said Dames at a signing ceremony on Thursday to seal the deal.

The DBSA loan, which will go towards building new Eskom power stations, will be drawn over a period of five years and does not make use of guarantees from government. Total guarantee by government to Eskom amounts to R350 billion.

Dames said the build programme, which will add 12 300 megawatts of additional generating and transmission capacity to South Africa's grid by 2017, was essential to provide the security of supply the country needs to grow the economy as well as improve the quality of life of its people.

DBSA Chief Executive Paul Baloyi said the deal signified a major step towards ensuring South Africa's long term electricity needs.

He said the bank was working in partnership with the Department of Energy and National Treasury to support renewable energy.

"Electricity is a major component of municipal revenue and it is only logical for the bank to contribute to the funding of projects that will help to ensure a secure supply of energy for South Africa," Baloyi said.

The creation of 40 000 new jobs, the stimulation and creation of new industries and adding almost 1 percent to the economic growth rate are some of the spin-offs of the capacity expansion programme.

Earlier this year, Eskom raised a $3.75 billion loan from the World Bank. It also has a $500 million loan from the African Development Bank and a EUR186 million loan from the European Investment Bank.

Today's loan is the first from a domestic development finance institution.