Bloomberg News

Eskom Gets $365 Million African Development Bank Plants Loan

June 01, 2011

(Updates with minister’s comments from fourth paragraph.)

June 1 (Bloomberg) -- Eskom Holdings Ltd., South Africa’s state power utility, received a $365 million loan from the African Development Bank to help fund wind and solar plants, Public Enterprises Minister Malusi Gigaba said.

The plants will each produce 100 megawatts of power and help South Africa meet its commitment to providing more clean energy, he told lawmakers in Cape Town today.

Eskom currently has 40,000 megawatts of capacity, more than 80 percent of which comes from coal-fired plants. The utility, which supplies about 95 percent of South Africa’s electricity, was given a $3.75 billion World Bank loan in April last year to fund expansion on condition it introduces renewable energy projects.

“Eskom has incorporated renewable energy projects into its build program,” for which is seeking to tap additional sources of funding, Gigaba said. “Eskom has submitted a $250 million loan application to the World Bank for funding from the Clean Technology Fund, the final outcome of which is expected later this year.”

Johannesburg-based Eskom supplies power to Xstrata Plc’s ferrochrome furnaces, AngloGold Ashanti Ltd.’s gold mines and BHP Billiton Ltd.’s aluminum smelters in South Africa. The utility, one of the 10 largest in the world by capacity, will spend about 76 billion rand ($11.2 billion) in the year through March 2012 on an expansion plan aimed at preventing a repetition of power blackouts that hit mines, factories and cities in 2008.

Eskom won’t be able to guarantee security of supply until its new Medupi plant begins producing power in late 2012, and will have to rely on private companies to meet any shortfall, according to Gigaba.

Since April last year, Eskom has signed contracts with five independent power producers to supply it with about 373 megawatts of power, and it has also agreed to buy 200 megawatts of electricity from municipalities for this winter, he said.

--Editors: Alex Devine, Stephen Cunningham

To contact the reporter on this story: Mike Cohen in London at mcohen21@bloomberg.net

To contact the editor responsible for this story: Andrew J. Barden at barden@bloomberg.net


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