The African Development Bank (AfDB) today announced it arranged for South Africa's power utility Eskom to receive USD 1.34 billion (EUR 1.22 bn) in loan facilities to support renewable energy development, among others.
Leveraging its AAA-rating, AfDB has arranged USD 965 million through participation arrangements with nine commercial banks, including Bank of China, Bank of Tokyo-Mitsubishi, CaixaBank, Citibank, HSBC, JP Morgan Chase, KfW IPEX Bank, Siemens Bank, and Standard Chartered. The operation represents the largest syndicated A/B Loan arranged to-date in Africa and an important milestone for AfDB's cross-border mobilization efforts, the latter said in a news release.
The signing represents AfDB's second private-sector operation with Eskom, which builds on its USD 500 million non-sovereign corporate loan approved in 2008. Since 2008, AfDB has also extended three public sector loans to Eskom with funds in excess of USD 1.35 billion, including funding from its Clean Technology Fund.
Eskom's 2016-2020 capital expenditure program includes investments in new generation, plant refurbishment, transmission lines, and capacity building in excess of USD 17 billion.
By 2020, the utility wants to increase South Africa's electricity generation by nearly 11,000 MW and expand its transmission network by over 9,500 kilometres. South Africa's Renewable Energy Independent Power Producer (REIPP) Programme is expected to increase electricity generation by a further 5,000 MW by 2019 and AfDB's investment will be partly directed at the construction of the transmission network required to evacuate power from South Africa's independent power producers (IPP) programmes.
The REIPP Programme has attracted USD 14 billion in investment, of which nearly 30% constitutes foreign direct investment.
"South Africa has the third most attractive renewable energy market across emerging markets (behind China and Brazil) and this programme, spearheaded by the South African Department of Energy, is an example of how to approach green growth in Africa," says Stefan Nalletamby,acting vice-president for private sector, infrastructure, and regional integration at the AfDB.
South Africa trades approximately 5% of its energy capacity with neighbouring countries in the Southern Africa region. While the country imports electricity from Mozambique, South Africa is a net exporter of energy to Zambia, Lesotho, Swaziland, Zimbabwe, Botswana and Namibia.
AfDB estimates Eskom's investments will help boost electricity generation in Africa by nearly 10%, heralding progress toward the bank's vision to achieve universal access to energy by 2025 under the New Deal for Energy in Africa.
(USD 1 = EUR 0.907)
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