Power utility Eskom has entered into a loan agreement with the African Development Bank Group for R2.8bn and $25m, totalling over R3bn.
The sum of $25m equals approximately R347m at current exchange rates.
This is according to a statement issued by Eskom on Tuesday afternoon.
The loan will be used to improve power transmission in Southern Africa, Eskom said. The power utility exports power to at least six countries in the Southern African region.
Eskom and AfDB have been in partnership since 2009 when bank had approved the first loan facility to support Eskom's capital expansion programme.
This loan agreement is for construction that extends 552km. It consists of transmission lines and associated substations across Mpumalanga and Kwa-Zulu Natal provinces, and will also be used to upgrade substation equipment including earthing systems at various existing substations in Mpumalanga, Eskom said.
It will also incorporate renewable energy into the transmission network, ensure reliability and security of supply, reduce transmission losses and improve regional integration an safety operations, among other things.
"The AfDB and Eskom have had a long-standing partnership, through which the Bank is supporting the transformation of this critically important utility.
"The financing of the Eskom Transmission Project will result in a significant strengthening of South Africa’s transmission infrastructure. Not only will this improve the reliability and security of electricity supply, but will also allow for the integration of large-scale renewable energy into the transmission network, enhance network capacity for future load growth and ensure reduction in transmission losses," said Dr. Kapil Kapoor, director general of the AfDB's Southern Africa bureau.
"We are particularly thankful for the continued support in a time when Eskom has made major advancements towards fully securing the R72bn funding requirement for this year," said Eskom's acting Chief Financial Officer Calib Cassim.
"These kinds of facilities are a demonstration of the Bank’s mandate to contribute to the economic development and social progress of African countries," he added.
Earlier this year, Eskom secured a $2.5bn (over R33bn) loan from the China Development Bank.
The terms and conditions of the loan have been a subject of contention, but President Cyril Ramaphosa said none of SA's assets would be seized in the event of a default.
Ramaphosa told Parliament earlier this month that Eskom had not failed to pay its loans in the past.
"Eskom has not failed to live up to the payments it should live up to when it comes to repaying loans. We do not intend to have Eskom defaulting on agreements it is entering into," he said.
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