State-owned Eskom is battling to shore up electricity supplies due to an economic boom which has boosted demand after decades of underinvestment in the power sector.

The power crisis has scared investors and cast a shadow over the economic outlook. Platinum and gold mines continue to operate below full capacity and millions of homes and businesses are regularly plunged into darkness.

"A non-sovereign guaranteed long-term loan in the amount of UA (units of account) 333,04-million (US $500-million) was granted to Eskom by the bank, with a repayment period of 20 years including a grace period of five years," said the African Development Bank's (AfDB) 2007 annual report.

Eskom plans to spend R343-billion over the next five years on generating capacity. The National Treasury said it will give Eskom R60-billion over the next five years.

The report was distributed at a conference in Maputo to discuss economic growth on the continent.

Poor infrastructure capacity and inadequate power generation is constraining economic growth in the world's poorest continent, and the AfDB said it is aggressively investing in projects which would help to reduce poverty and stimulate economic revival.

The bank said private sector funding approvals in 2007 rose to UA 1-billion from UA 278,5-billion in 2006, with loans dominated by infrastructure projects, followed by finance, industry and agriculture.

The Eskom loan was one of the five major private sector operations in 2007, with others including the Ambatovy nickel and cobalt project in Madagascar (UA 100-million) and the Damietta port container terminal in Egypt (UA 94,3-million).

"The bank's loan (to Eskom) is intended to assist the government in achieving the GDP growth target of 6 percent per annum from 2010," the report said.

"Expected outcomes (include) ... fulfilling the electricity demands of various industries in the country through the implementation of electricity generation projects, involving a total capacity of 11,850 megawatts over the 2007-2014 period."

Other objectives were to ensure security of supply and improve the Eskom's operational efficiency, while widening access to electricity from 72 percent of South Africans to 100 percent by 2012.

To subscribe to Engineering News's print magazine email subscriptions@creamermedia.co.za or buy now.