The African Development Bank (AfDB) has approved a senior corporate loan of about $375-million and a corresponding syndicated loan for up to $750-million to support the capacity expansion programme (CEP) of South African State-owned power utility Eskom.

The newly approved loan is being financed through the bank’s private-sector window. Through this operation, AfDB is also crowding cross-border financing into the continent – through the syndicated loan – with commercial banks.

Eskom’s CEP will be rolled out from 2015/16 to 2019/20, and will contribute to a comprehensive expansion of South Africa’s generation capacity and transmission network.

Through the CEP, the power utility will maintain and rehabilitate nearly 8 000 MW of installed capacity, while adding 10 986 MW of baseload capacity, including a 1 332 MW renewable-energy peaking station.

The programme will also expand Eskom’s transmission network by 9 756 km, thereby connecting the power utility’s new-generation power plants and the nearly 90 independent power producers under government’s Renewable Energy Independent Power Producer Procurement Programme.

Eskom’s expansion plan will not only concentrate on the country’s power shortages but also restore South Africa’s role as electricity exporter.

The CEP also aims to catalyse economic growth and job creation in South Africa and further afield.

AfDB’s corporate loan complements previous loans it approved in support of developing Southern Africa’s energy sector. The first corporate loan of $500-million was approved in 2008; the second loan of 1.860-million – to finance the 4.8 MW greenfield Medupi project, in Lephalale, Limpopo – was approved in 2009.

The coal-fired power plant will comprise six units, with a total of 4 764 MW installed capacity. Construction activities started in May 2007 and the power station is planned to be fully installed by 2019.

Once completed, the power station will be the fourth-largest coal-fired plant and largest dry-cooled power station in the world.

In 2011, loans of $265-million and $100-million were approved through the AfDB’s public window and Clean Technology Fund respectively.