Eskom gets nod of confidence
• German bank provides $100m loan facility to help with renewables
The clean-up at Eskom has boosted investor sentiment and money has begun to flow back into the troubled stateowned enterprise.
The clean-up at Eskom has boosted investor sentiment and money has begun to flow back into the troubled state-owned enterprise. Upon securing a $100m loan facility on Friday, the utility has raised 20% of its R72bn funding requirement for the current financial year.
Eskom has faced a liquidity crisis since 2017 when financiers would not loan it more money over concerns of poor governance.
The utility’s failure is considered the single largest risk to the South African economy. However, a measure of confidence was revived in January when a new board was installed.
The $100m loan facility, equivalent to R1.37bn, was extended by KfW, a German development bank, for the integration of renewable energy projects into the national power grid. To date, Eskom has raised almost R15bn since the financial year began in April.
But it will have to cater for unbudgeted expenses such as wage hikes.
Eskom has an existing partnership with KfW. In 2015, the development bank extended R3.9bn in funding to the utility, but “from July last year until January this year, even the companies we have partnerships with didn’t want to do business with us because of the dark cloud of corruption hanging over Eskom”, said spokesman Khulu Phasiwe.
He said faith in the institution appeared to be renewed now that action had been taken against those executives fingered in the public protector’s State of Capture report.
The KfW loan, Phasiwe said, “is an indicator we are on the right trajectory”.
In terms of the agreement with KfW, the funds would go towards further investments in the transmission network in the Northern Cape to integrate renewable energy independent power producer projects into the national grid. The funding
will also assist in the second phase of improvements in Harrismith and the greater East London region.
Unions, including the National Union of Mineworkers and the National Union of Metalworkers of SA, have argued that power purchase agreements between Eskom and renewable energy producers will cause job losses in energy, mining, transport and other sectors.
JOB LOSSES
Labour estimated the latest power purchase agreements, signed in March, would cost 30,000 jobs. They also claimed such purchase agreements have contributed to Eskom’s weak financial position.
Davin Chown, chairman of the South African Photovoltaic Industry Association, said the loan was welcome, provided it was used for grid integration of renewables and facilitating the transition to a low-carbon economy, as recently outlined by Energy Minister Jeff Radebe.
KfW’s previous loan to Eskom in March 2015 was to facilitate renewable energy grid integration as well as overall grid strengthening.