Agence Française de Développement signs a R1.5 billion loan agreement to support Eskom’s investments in power grid. Photo: Henk Kruger/African News Agency (ANA)

CAPE TOWN – Eskom and Agence Française de Développement (AFD) on Thursday signed a R1.5 billion loan agreement to support the electricity utility’s investments in extending and strengthening its power transmission grid along the west coast of South Africa. 

LISTEN:

Eskom spokesperson Khulu Phasiwe confirmed this to Business Report on Thursday saying the R1.5bn loan constituted the first tranche of a R6.5bn multi-tranche loan facility signed between the two institutions in March 2017.

Eskom’s group chief executive Phakamani Hadebe said this loan facility would contribute to Eskom’s plans to strengthen and refurbish the transmission infrastructure while diversifying our funding structures. 

“AFD remains part of a core of longstanding partners to Eskom, and we regard the signing of this loan agreement as a formal yet symbolic gesture of a sustainable partnership in aiding Eskom to enhance the security of supply, and stabilise the power systems in South Africa. We look forward to executing future opportunities with AFD”, said Hadebe.

In a statement, Eskom said the transmission system played a pivotal role in the nationwide provision of electricity, as it delivered electricity from the power stations to distribution centres across South Africa. 

“This first tranche will be dedicated to the financing of the Namaqualand Strengthening Phase 2: Juno Gromis Project, which aims to strengthen the power network in the Northern Cape Province, integrate renewable energy sources, and ultimately facilitate cross-border transmission.

“The project will include the construction of a 282km 400kV line between the Juno substation in the Western Cape Province and Gromis substation in the Northern Cape Province, with associated feeder bays and transformer bays. Construction is expected to start in early 2019,” said Eskom.

The state-owned entity said the loan facility from AFD aimed to support Eskom’s investment policy in strengthening its high-voltage electricity network, in order to ensure the integration of planned or under-construction renewable energy sources. 

It said this was in line with the power utility’s Transmission Development Plan 2019-2028 (TDP) investment of R91bn for the construction of 6 535km of high voltage lines, and the installation of 45 900MVA of additional transmission capacity.

Bruno Deprince, AFD’s regional director, said: “AFD’s funding to Eskom reaffirms our commitment to support the public utility’s efforts to diversify its energy mix, which will ultimately strengthen its capacity to respond to the growing energy needs of South Africa while addressing the climate change challenges attached to it. This funding also demonstrates our support to Eskom in a period of transition and recovery.”

BUSINESS REPORT ONLINE