South African electricity producer Eskom confirmed yesterday (10th November) that it has agreed a $500 million loan with the African Development Bank (AfDB) to help fund its R343 billion investment programme.

The 20-year loan - which is particularly notable as it is the highest ever granted by the private sector division of the bank - has been welcomed by the state-owned utility.

Financial Director Bongani Nqwababa explained that the extra cash will play a crucial role in ensuring the smooth running of Eskom's capital expansion in South Africa.

He claimed that it is struggling to raise funds from abroad, despite signing a €250 million export credit financing loan deal with KfW-IPEX Bank in September to help pay for six boilers at its new Medupi power station.

Mr Nqwababa told Engineering News: "The signing of the loan agreement comes at a time when Eskom needs to meet its most significant challenge yet.

"The next five years remain critical for Eskom through our capital expansion programme to contribute and provide a broader platform for a striving South African economy. We are likely to be in this expansion phase for the next two decades."

Eskom hit the headlines back in January when it suffered a four-day power outage, causing production to be severely compromised to the tune of R12 billion at mines across the country.

It has since announced a new power conservation programme which would target mandatory savings from South Africa's top 300 energy-intensive businesses, rebuking claims that it would be applied wholesale.

The utility justified the plans by accusing mines of not saving enough power to prepare for outages, suggesting that savings of just two to three per cent have been achieved since the load-shedding of February and March.

However, Chamber of Mines President Sipho Nkosi responded last week by expressing his belief that the government must put protocols in place for handling electricity shortages because mines are "easy targets".

And Public Enterprises Minister Alec Erwin claimed in September that new power stations must be built and that an investment of around R1 trillion would be necessary.

Despite these suggestions, concerns over the South African economy persist, with National Treasury Director General Lesetja Kganyago stating recently that it will not be "immune" to the global financial crisis.



Sources:

Eskom, AfDB sign $500m loan to help fund expansion (10/11/08)
http://www.engineeringnews.co.za/article.php?a_id=147122

S Africa plans to stop blackouts (03/09/08)
http://news.bbc.co.uk/1/hi/business/7596521.stm

South African Mines Demand Power Shortage Protocols (Update2) (04/11/08)
pid=20601116&sid=apQRIJmSd5VI&refer=africa

Mines not saving power, says Eskom as it unveils compulsory plan (29/10/08)
http://www.miningweekly.com/article.php?a_id=146297

UPDATE 1-S.Africa's Eskom signs 250 mln euro finance loan (10/09/08)
http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSLA46900220080910

South Africa Not Immune to Global Financial Crisis (Update2) (17/09/08)
pid=20601116&sid=aDly7ZLkIJxM&refer=africa