Johannesburg - State owned utility Transnet has signed a R4 billion loan agreement with the Japan Bank for International Co-operation (JBIC) to fund the widening and deepening of the Durban harbour.
Speaking after the signing of the agreement on Thursday, acting Transnet Chief Executive Officer Chris Wells said the project is primarily intended to enable the port to accommodate larger vessels and benefit Japanese companies.
"The nature of the loan is that it will be supportive of Japanese projects in South Africa," said Mr Wells.
He thanked the JBIC for its confidence in the company as well as the country.
Loaning the money is in line with JBIC mandates, according to its finance department head, Toshiro Machii.
The bank has a mandate to secure natural resources for Japan, promote Japanese business abroad to enhance international competition and provide assistance to respond to the financial crisis.
JBIC has leveraged 40 percent participation of other Japanese financial institutions including the Sumitomo Mitsui Banking Corporation in the loan.
"We are very grateful that we could come to the execution of this loan," said Mr Machii, adding that Transnet had shown strong leadership.
He said the project will benefit both the South African economy and the Japanese companies.
"This project has a very significant implication for the South African economy as well as the regional economy but at the same time it brings a lot of benefits to Japanese companies operating in the region," said Mr Machii.
He said these companies relied heavily on the harbour, adding that he hoped the project will be implemented smoothly.
Transnet will make 20 repayments to JBIC over the next 10 years.
JBIC is in talks with other South African businesses for funding new projects, but these are still in early stages, said Mr Machii, adding that the bank is not yet in a position to disclose details.