South African power sector to receive almost $1 billion in loans from New Development Bank
South African power utility Eskom is set to receive over half of the $790 million in loans granted from the New Development Bank (NDB).
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 ($4.9 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 source at the NDB – founded in 2014 by Brazil, Russia, India, China and South Africa to fund infrastructure projects in emerging markets – said that around $480 million of the $790 million was for Eskom’s Medupi power plant project in the north of the country.
The rest of that money would be split between the Lesotho Highlands water project and a renewable energy venture, the source said.
Separately, the New Development Bank (NDB) and Eskom also signed an agreement for a $180 million loan for a project to integrate renewable energy capacity into South Africa’s electricity grid.
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.