A development bank set up by the BRICS group of emerging economies has approved around $790 million of loans for three projects in South Africa, the bank’s president said on Monday, with over half that amount going to power company Eskom Holdings SOC Ltd. Eskom is battling for its survival after a decade of steep financial decline during which its costs soared and electricity sales stagnated.
South African president Cyril Ramaphosa has promised a 69 billion rand ($4.86 billion) bailout for Eskom over the next three years and says the company will be split into three to make it more efficient. But the cash-strapped utility is still hunting for more money to shore up its finances.
A person at the New Development Bank—set up in 2014 by Brazil, Russia, India, China and South Africa—said that around $480 million of the new funding was for Eskom’s Medupi power plant project in the north of the country.
The rest of the money would be split between the Lesotho Highlands water project and a renewable energy venture, the person said.
Problems at Medupi, which will be one of the largest coal-fired power stations in the world when complete, are partly responsible for the latest round of power cuts which Eskom implemented this year.
“We plan to end the year with total loan approvals of about $2.3 billion in South Africa,” NDB president K.V. Kamath told the bank’s annual meeting in Cape Town.
Dondo Mogajane, director general of South Africa’s finance ministry, confirmed part of the approved funding was for desulphurisation equipment at Medupi.
Separately, the BRICS Bank and Eskom on Monday signed an agreement for a $180 million loan for a project to integrate renewable energy capacity into South Africa’s electricity grid.