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Johannesburg - After having its long-term local and foreign credit rating downgraded, cash-strapped power utility Eskom on Wednesday, signed a R20 billion short-term credit facility with a consortium of local and international banks.

The government guaranteed facility will form part of the financing for Eskom’s current capital expenditure programme. 

Eskom said that the terms of the facility are comparable to its existing facility agreements and pricing is aligned to market benchmarks of similar structures. 

Read more: Eskom receives another downgrade by S&P

Eskom’s interim group chief executive Phakamani Hadebe said that they viewed the successful execution of the facility as a demonstration of the financial markets' confidence in Eskom's turn-around strategy. 

"We are cognisant of the challenges that are still ahead for the business and we are committed to ensuring that we expediently transition Eskom’s operational and financial profile to adequate standards," Hadebe said. 

"Eskom remains a critical enabler for South Africa’s economic growth and it is critical that we attain maximum operational efficiency for the business to avoid negatively impacting the macro-environment."

Eskom acting chief financial officer, Calib Cassim, said that concluding the facility with the suite of banks reiterated the renewed willingness by financial markets to engage with Eskom. 

"The funding provides Eskom with sufficient liquidity to allow the company time to continue resolving its governance related issues and enables Eskom to recommence with its normal funding program required to execute the FY2018/19 funding plan," Cassim said.

African News Agency/ANA