/ 14 May 2008

ADB lends $500m to Eskom for expansion

The African Development Bank (ADB) has lent $500-million to fund Eskom’s multibillion-dollar expansion project, and to help the power-starved country achieve 6% economic growth from 2010, the bank said on Wednesday.

State-owned Eskom is battling to shore up electricity supplies due an economic boom that has boosted demand after decades of underinvestment in the power sector.

The power crisis has scared investors and curbed the country’s economic outlook as key platinum and gold mines continue to operate below full capacity and millions of homes and businesses are regularly plunged into darkness.

”A non-sovereign guaranteed long-term loan in the amount of [$500-million] was granted to Eskom by the bank, with a repayment period of 20 years including a grace period of five years,” said the ADB’s 2007 annual report.

The report was distributed at a conference in Maputo to discuss economic growth on the continent. Poor infrastructure capacity and inadequate power generation is constraining economic growth in the world’s poorest continent, and the ADB said it is aggressively investing in projects that would help to reduce poverty and stimulate economic revival.

”The bank’s loan [to Eskom] is intended to assist the government in achieving the GDP growth target of 6% per annum from 2010,” the report said.

Other objectives were to ensure security of supply and improve the Eskom’s operational efficiency, while widening access to electricity from 72% of South Africans to 100% by 2012. — Reuters