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 also concluded a tripartite financial partnership agreement amounting to €450 000 (R6.8 million) with Électricité de France (EDF) and AFD. 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.
The grant will finance a knowledge exchange and expertise from EDF on various areas specific to power utilities ranging from distribution to renewable energy integration, and key recommendations to improve its performance in terms of system efficiency and reliability. The primary objective of the partnership is knowledge, experience and expertise sharing between the two utilities.
AFD has previously supported Eskom through loans for the construction of the 100 MW Sere Wind Farm for a value of €100 million, and the concentrating solar power (CSP) plant for a value of €100 million.
The loan agreement and the grant funding form part of the Eskom borrowing plan 2015/16 to 2019/20.
AFD Regional Director Martha Stein-Sochas said: “After supporting Eskom in the development of its renewable energy generation capacity, AFD is very pleased to expand its cooperation in the field of distribution. This program will greatly contribute to the reduction of the regional inequalities in access to electricity in South Africa, and contribute to the objective of the government towards universal electricity access by 2025. We are also very proud to finance the partnership between Eskom and EDF, in areas where French expertise can help Eskom meet some of the challenges it is facing today.”
EDF South Africa Managing Director Fawzi Issa said: “Over the last 30 years, EDF and Eskom have progressively built fruitful partnership relations in number of areas, ranging from nuclear operation and thermal energy generation. Today, Electricité de France is proud to extend this partnership to electricity distribution and grid performance. EDF is deeply convinced that this collaboration based on know-how sharing and providing specific technical support will benefit both companies and the reliability of South African electricity distribution networks.”
Eskom’s Group Chief Executive Brian Molefe said: “Eskom has enjoyed a fruitful relationship with the Agence Francaise de Developpement and the agreements further cement this relationship. And we look forward to sharing knowledge and good practices with our peer, Électricité de France. Both agreements will contribute towards areas of development and the strengthening of our distribution networks in some of the most remote and impoverished parts of our country.”
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.”
- Download a fact sheet about the laon agreement here.
- Download a fact sheet about the grant FEXTE here.
- Download Ambassador Barbier’s address here.