JOHANNESBURG – Beleaguered power utility Eskom yesterday received a R2.88 billion loan from the African Development Bank (AfDB) to upgrade and expand its transmission facilities in South Africa and in the SADC region.
Chawki Chahed, AfDB’s head of communications, said the loan would enable Eskom to produce additional power at its Kusile, Majuba, Drakensberg and Ingula power stations and help the utility’s corporate restructuring and governance programmes.
Chahed said the loan, which was approved on Tuesday, would be covered by a government guarantee to finance critical projects.
“The transmission lines will provide additional power evacuation paths for new generation capacity, ensure availability of power for future load growth, enable the reduction of network losses and ensure safety of personnel and assets during network operations to ensure compliance to the Grid Code,” Chahed said.
Eskom’s net debt is estimated to be around R399bn, with gearing ratio (debt to equity ratio) of more than 70 percent as the utility battles dwindling sales volumes and growing municipal debt.
In February the Public Investment Corporation advanced a R5bn bridging facility to the power utility for one month.
In the six months ended September 30 last year, Eskom’s liquid assets decreased from R30bn at the end of September 2016 to R9bn.
This year Eskom reported a net loss of R2.3bn for the year to end March.
Eskom spokesperson Khulu Phasiwe said the loan would bolster the transmission of electricity to provinces such as KwaZulu-Natal, which had no production capacity of its own.
Phasiwe said the province needed more than the 2000 megawatts for developments in Durban and rural areas.
“So the 550km of line from Mpumalanga to the province will be strengthened and we can evacuate power more efficiently,” Phasiwe said. “All power transmitted will now reach its destination.”
Ted Blom, a partner at the Mining & Energy Advisory and Energy Expert Coalition, said the loan would keep the utility going for a little while longer.
“Eskom is burning about R10bn a month, so this loan is only a temporary reprieve,” said Blom. “Eskom needs to restructure and rein-in corruption.
“Anything short of that will not help them much.”
Meanwhile, Phasiwe said the utility was finalising details on appointing 12 independent mining companies that would help address the coal shortage problem after the utility recently admitted that 10 of its power stations had less than 20 days’ supply of coal.
“We have concluded a few contracts and are working on the finer details of the agreements with these companies that will mine the coal for us,” he said.
He said Eskom was hopeful the companies would help solve the problem as some had ready stockpiles.