SA says Chinese loan to Eskom not in jeopardy

Government and Eskom are working to ensure the transfer of funds from CDB to Eskom, public enterprises ministry says.
The drawdown delay in March from the Chinese Development Bank meant that SA had to bring forward a planned bailout for Eskom. Picture: Moneyweb

South Africa‘s public enterprises ministry on Thursday said that a China Development Bank (CDB) loan to struggling state power company Eskom was not in jeopardy.

Eskom had expected to draw down R7 billion ($481 million) from a $2.5 billion CDB loan facility by late March, but South Africa‘s finance ministry said in a report to parliament last month that the drawdown had been delayed.

The delay meant South Africa had to bring forward a planned bailout for Eskom, which supplies more than 90% of the electricity in Africa‘s most industrialised economy but has been grappling with a severe financial crisis.

The South African government and Eskom are working to ensure the transfer of funds from CDB to Eskom, the public enterprises ministry said in a statement.

“It must be emphasised, for the sake of clarity, that this, or any other loan, is in no way connected to the issue of equity in any of our state-owned enterprises,” the statement said.

The Chinese loan to Eskom was agreed in July last year, during a visit to South Africa by Chinese President Xi Jinping.

Eskom is battling with liquidity problems. The government has promised the utility a bailout of R23 billion a year over the next three years, but energy experts say it will need more support.

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