South Africa is in talks with the World Bank over a loan of up to $5-billion for Eskom’s expansion programme, a senior official at the Treasury said on Wednesday.
Eskom, which provides 95% of the country’s power, has been rationing electricity since January, when the national grid nearly collapsed, affecting major industries, including mining.
In its bid to reverse years of underinvestment in power, and to ease chronic power shortages, Eskom plans to spend a total of about R343-billion over five years on new power plants.
”We have been in a series of discussions with the World Bank already on a possible loan, the maximum of which could be up to $5-billion,” said Lungisa Fuzile, acting head of assets and liabilities at the National Treasury.
”The processes [show] that it might take longer [to secure] … but we are looking at creative ways, legal ways to expedite that,” he said.
He added that Eskom was also in discussions with a range of export credit agencies for funds, but did not elaborate.
Eskom has already secured a $500-million 20-year loan with the African Development Bank (AfDB), and about R60-billion from the government, but is still far short of its target.
Its task was made more daunting by the global credit squeeze and a downgrade of Eskom from A1 to Baa2 by rating agency Moody’s in August this year.
The utility has said it would raise further funds from capital markets, higher power tariffs or loans with development agencies such as the World bank and the AfDB.
”Already they [Eskom] have signed a loan of $500-million with the African Development Bank and as recently as last week I was in contact with the [bank] … and they indicated to me they are willing to consider arranging a further $1-billion loan to Eskom,” said Fuzile at a Reuters assets managers meeting in Cape Town.
Earlier, Eskom spokesperson Fani Zulu told Reuters the company was not planning to sell a Eurobond this year.
Chief executive Jacob Maroga told Reuters in July the utility was planning a dollar-denominated Eurobond issue roughly equal in value to the €500-million issue made in February 2006. — Reuters