Johannesburg - Eskom had received loans of approximately R20 billion from the African Development Bank (AfDB) to fund its multibillion-rand programme to expand the country’s electricity capacity, the power utility said yesterday.
Eskom, which has a funding target of R327bn over the next five years, said it would focus on increasing borrowings from a number of sources, including export credit agencies, development financing institutions, domestic and international bond markets, and the sale of non-core assets.
The loan is made up of a $365 million (R5bn) unguaranteed senior unsecured loan and a $10m guaranteed A-loan.
“The $365m loan facility will be provided to Eskom in rand equivalent amounting to R5bn,” Eskom said.
The utility said it had appointed the AfDB as the arranger for a further $965m guaranteed syndicated B-loan facility from various commercial lenders including Bank of China, Bank of Tokyo-Mitsubishi, CaixaBank, Citibank, HSBC, JPMorgan Chase, KfW Ipex Bank, Siemens Bank and Standard Chartered.
The senior unsecured loan and the A-loan were payable over 20 years, both with a two-year grace period from the date of signing. The principal debt on the B-loan would be settled five years from the signing date. Other terms of the loans were negotiated at competitive Development Finance Institutions market-related rates.
Expansion
The signed facilities would fund the general capital expansion programme, which includes new plants, maintenance and refurbishment of generation, transmission and distribution infrastructure, and a skills development programme.
Eskom chief executive Brian Molefe earlier this week said it had secured 57 percent of funding for the 2016/17 financial year. “The African Development Bank continues to be a significant partner and a key contributor to the progress achieved by Eskom in the execution of the current build programme,” he said.
“We are particularly grateful for the continued support in a time when Eskom has made major advancements in achieving operational and financial sustainability and expediently completing the build programme. These facilities are a demonstration of the bank’s mandate to contribute to the economic development and social progress of African countries.”
Meanwhile, Eskom had until April to submit the next multiyear price determination (MYPD), the National Energy Regulator of South Africa (Nersa) said yesterday.
When it made a ruling on the MYPD3 Regulatory Clearing Account (RCA) application for the financial year 2013/14, Nersa said Eskom should submit a new MYPD application within three months.
Extension request
“On May 12, Eskom submitted an application requesting an extension to submit the new application on April 1, 2017. Eskom cited statutory consultation requirements and the revision of the MYPD methodology as reasons for the request,” Nersa said.
Eskom chief financial officer Anoj Singh this week indicated that Eskom would apply for above inflation prices when it submitted its MYPD 4 revenue application.
The regulator has also decided that Eskom’s RCA applications for the second and third years of the MYPD3 (2014/15 and 2015/16) should be submitted simultaneously.
The RCA is a cost recovery mechanism that seeks to reconcile the tariffs Nersa awarded Eskom on the basis of a range of forecasts and what materialised, as reflected in the utility’s financial statements.
BUSINESS REPORT