Eskom CFO Anoj Singh
Photo by: Duane Daws
State-owned power utility Eskom reported on Thursday that it had concluded three loan facilities with the African Development Bank (AfDB) collectively valued at around R20-billion.
The signed facilities will be used to fund the utility’s general capital requirements, including new-build projects, the maintenance and refurbishment of generation, transmission and distribution infrastructure and skills upgrading.
Eskom currently has a R339-billion capital investment plan for the coming five years, but has indicated that the project portfolio will be “scrubbed” in 2016/17 to release additional capital savings for the existing portfolio.
The announcement was made against the backdrop of Eskom having secured 57% of its funding requirement for 2016/17 and confirmation that the group had a funding target of R327-billion over the coming five years to 2020/21. Over the same period, debt servicing of R383-billion will be required.
CFO Anoj Singh has indicated that Eskom will seek to secure as much development finance as possible, having already leaned heavily on government in 2015/16, when a R60-billion shareholder loan was converted to equity and when Eskom also received a R23-billion equity injection.
The AfDB has approved a $365-million unguaranteed senior unsecured loan and a $10-million guaranteed A-loan, with the $365-million loan facility representing a rand equivalent of R5-billion.
In addition, Eskom has appointed the AfDB as arranger for a further $965-million guaranteed syndicated B-loan facility from various commercial lenders including Bank of China, Bank of Tokyo-Mitsubishi, CaixaBank, Citibank, HSBC, JP Morgan Chase, KfW IPEX Bank, Siemens Bank and Standard Chartered.
Eskom reports that the senior unsecured loan and the A-loan are payable over 20 years and have a two-year grace period from the date of signing. The principal debt on the B-loan will be settled five years from the signing date.