Pretoria - The African Development Bank (AFDB) is to loan Eskom R20.7 billion for its Medupi Power Station project in Lephalale, Limpopo.
The power station is part of the power utility's capital expenditure programme, aimed at reducing the country's electricity generation capacity deficit. It is expected to provide additional generation capacity of 4.764 mega watts.
The total cost of the Medupi project is estimated at R124.42 billion, and the AFDB funding will be used to fund the supply and installation of boilers and turbo-generators, according to a statement.
The loan will be a direct loan to Eskom with a sovereign guarantee from the government of South Africa.
At the end of August 2009, the AFDB had approved the funding of 16 projects in South Africa. The Eskom loan will be the biggest project that the AFDB finances in South Africa, and also the biggest loan ever approved by the AFDB.
In 2008, the AFDB approved a loan of US$500 million to Eskom through the AFDB private sector window.
Eskom will submit a revised request for tariff increases for the next three years to the National Energy Regulator of SA on Monday, after criticism of its initial plan to raise tariffs by 45 percent a year for the next three years.