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Eskom signs $159m power-distribution pact with AFD

The money will finance investments for grid strengthening, refurbishments and reinforcements.

Eskom Holdings signed a 150 million-euro ($159 million) credit agreement with France’s development agency to help the cash-strapped South African power company improve distribution of electricity from renewable-energy projects.

Funds from the 25-year facility provided by Agence Francaise de Developpement will go toward distribution projects in the KwaZulu-Natal, Eastern Cape and Limpopo provinces, the Johannesburg-based utility said in a statement on Monday. It includes a five-year grace period and 20 years of capital repayment.

The money will finance investments for grid strengthening, refurbishments and reinforcements, the company said.

Eskom has added more than 2 000 megawatts of capacity generated by independent producers to its grid, helping ease a shortage of electricity in Africa’s most-industrialised economy. The country’s power-supply system was plagued by rolling blackouts in the first half of this year that have curbed mining and manufacturing, both knocked by strikes that limited 2014 growth to the slowest pace since a 2009 recession.

The utility, which supplies about 95% of South Africa’s power, is contracting private companies to supply it with 17 000 megawatts of renewable energy and electricity generated from coal and gas by 2022. In April, it borrowed R4 billion($285 million) from Germany’s KfW Group to make the nation’s power grid fit for an increasing share of renewable generators.

Electricite de France and AFD will provide Eskom a grant of 450 000 euros to pay for expertise on integrating renewable energy, it said.

©2015 Bloomberg News

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