BRICS bank throws Eskom $180m lifeline
CAPE TOWN – Cash-strapped power utility Eskom yesterday received a $180 million (R2.56 billion) cash injection from the BRICS New Development Bank (NDB) to fund the integration of renewable energy into the grid, and to augment transmission projects.
The bank said the loan, which was signed at the NDB’s fourth annual meeting in Cape Town on Monday, would provide Eskom with a sovereign guarantee for these projects.
Bank vice-president Xhian Zhu said the loan would be used to support the development of grid connection infrastructure, which was vital for the development of renewable energy projects.
Xhian said the loan would also support renewable energy development and help reduce the country’s reliance on fossil fuels.
“The project is coherent with the bank’s focus on projects that incorporate sustainability from their inception. Moreover, we believe that supporting South Africa’s energy sector is in line with the bank’s mandate and our role as a reliable development partner,” Xhian said.
Renewable energy in South Africa is still in its infancy. Some 91.2 percent of Eskom’s power generation comes from coal-fired power stations, while only 4 500 megawatts (MW) is generated from renewable energy sources.
In February, the debt-ridden Eskom secured a R15bn loan through a consortium of local and international banks.
Finance Minister Tito Mboweni said the government had budgeted R23bn annually in the next 10 years to fund Eskom.
The NDB said the loan would help to integrate 670MW of renewable energy into the grid.
The bank said it would also help increase electricity supply to the targeted areas for sustainable development and enhance the country’s capacity for renewable energy, while achieving sustainable growth.
Eskom’s total debt is estimated at R420bn.
The utility’s chief financial officer, Calib Cassim said: “The successful conclusion of this inaugural transaction with NDB will significantly contribute towards driving Eskom’s goals to reduce South Africa’s CO² emissions. Eskom welcomes the support from NDB, and we look forward to fostering a valuable partnership with this organisation, whose mission is to enhance infrastructure for sustainable development in its member countries.”
The NDB also signed a $300m loan to the Development Bank of Southern Africa.
The bank said the loan would be used for the reduction of greenhouse gas emissions and energy sector developments that were designed to support renewable energy in the country.
It said the funding was also expected to contribute to unlocking private sector investment, and increasing the availability of long-term financing for projects in the energy sector.
NDB president Kundapur Kamath said the bank wanted to double its lending to about $16bn by the end of the year. Kamath said the bank would also issue bonds this year in local currencies in South Africa, Russia and India, apart from bonds that have been issued in renminbi in China, where it is headquartered.
He said regional offices would be opened in Brazil and Russia this year, after a local branch was opened two years ago.