S. Africa gets French help in boosting national grid

South Africa's electricity utility Eskom on Monday signed a loan agreement with the Agence Française de Développement (AFD) to enhance reliability of South African power grid.

The credit facility agreement, amounting to 2.3 billion rand (about 158 million U.S. dollars), will go towards financing Eskom's Distribution Projects in the KwaZulu-Natal, Eastern Cape and Limpopo provinces, Eskom said.

This came as Eskom is struggling to meet the growing demand of electricity. South Africa has been subjected to constant rolling blackouts since November last year due to poor maintenance of Eskom's generating units.

The facility is for 25 years, including a five-year grace period and 20 years of capital repayment, and will finance investments for grid strengthening, refurbishment, reliability improvements, minor reticulations, split metering and upstream grid reinforcement to cater for renewable energy.

In addition, Eskom has also concluded a tripartite financial partnership agreement amounting to 6.8 million rand (about 470,000 dollars) with Électricité de France (EDF).

The funding provided by AFD through this agreement will be in the form of a grant, and is the first ever grant for which Eskom is the key beneficiary.

As one of AFD's largest partners in Africa, Eskom is eligible for grant funding from the Technical Expertise Fund, which was established by the French Ministry of Finance.

AFD has previously supported Eskom through loans for the construction of the 100 MW Sere Wind Farm and the concentrating solar power (CSP) plant.

Eskom's Chief Financial Officer Anoj Singh said, "We are very pleased that the AFD is making this kind of investment in Eskom. The loan also enables us to improve Eskom's diversification of its funding sources given its terms, long tenor and low interest rate, when comparing it to other available sources." Endit