Eskom signs R20 billion loan agreement with China
Eskom has signed a US$1.5 billion (approximately R19.6 billion) loan agreement with the China Development Bank (CDB) at a signing ceremony held at Eskom’s head office Megawatt Park in Sunninghill, Johannesburg.
The facility will form part of the financing of the Medupi Power Plant, and will be paid back over 15 years. Eskom said it expects it debt to peak at R500 billion, up from R300 billion currently.
Eskom’s Interim Group Chief Executive Johnny Dladla said the conclusion of the loan agreement demonstrates financial markets’ confidence in Eskom and South Africa notwithstanding the challenging market conditions.
“We are confident that the agreement will cement Eskom’s relationship with the CDB. This loan will also aide us in ensuring that we complete the Medupi project and ensure security of energy supply,” Dlala said.
The state company told Reuters that it could tap the market for between $1 billion to $1.5 billion in sales in the next six months, having previously been impacted by governance issues to secure funding.
Eskom has suffered a leadership crisis in recent months following the resignation of several board members, including the chairman and chief executive.
The loan comes in the wake of government having to come to South African Airways’ aid with a R2.2 billion bailout, after one of the failing airline’s fanciers, Standard Chartered, called in a loan, refusing to extend the facility.
Economists warned that the situation was indicative of global lenders losing faith in South Africa’s ability to properly manage its state-run companies.
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