Cape Town – Power utility Eskom and Agence Française de Development (AFD) a bi-lateral development finance institution - signed a multi-tranche framework agreement of R6bn to support Eskom’s investments in the extension and reinforcement of its power transmission grid.
In a statement issued by Eskom, its chief financial officer Anoj Singh said the loan facility will help Eskom to strengthen and refurbish the transmission infrastructure, while also diversifying the power utility’s funding structures.
"AFD’s funding will be allocated towards transmission lines and substations that support grid strengthening in areas where the development of future renewable energy sources are envisaged," Singh said.
In addition it will support the facilitation of cross border transmission projects. In turn, the funding will contribute to AFD’s global objective of dedicating 50% of its funding to development projects that have a climate change co-benefit.
AFD’s chief executive officer, Rémy Rioux, said the new funding to Eskom reiterates the willingness of AFD to be a key financial partner of the South-African utility.
"Since the beginning of our engagement with Eskom, almost 10 years ago, we have made the choice to focus our support on targeted areas where we believe a development finance institution like AFD can provide value-added assistance, such as in the field of renewable energy production, renewable energy-related grid reinforcement and expansion, as well as technical knowledge sharing."
This funding represents the first multi-tranche facility approved by AFD on the African continent.
The funding is made available to Eskom to finance projects that are compliant with eligibility criteria that have been agreed upon between AFD and Eskom, such as Eskom’s Transmission Development Plan, which will contribute to the evacuation of the renewable energy (existing or future ones and help with the development of cross-border transmission networks.
AFD’s involvement with Eskom goes back to financing the Sere wind farm in 2007 for the Sere wind farm, and the recent signing of a €150m (R2.3bn) facility to support Eskom’s investments in the distribution network.
The partnership grant provided by AFD and the French Ministry of Finance will also lead to knowledge, experience and expertise sharing between the two utilities in various areas, including smart grids.
"We appreciate AFD’s long standing commitment and support and are pleased that we can continue the valuable partnership with this organisation," said Eskom group chief executive Matshela Koko.