Eskom gets R2,6bn loan from Brics-supported bank

WEB_PHOTO_ESKOM_DUVHA8_180115

A truck carrying a load of coal drives on the road towards Eskom's Duvha power station near eMalahleni, Mpumalanga. 17 January 2015.

JOHANNESBURG – Eskom is on the list of recipients awarded the first set of long-term loans by the New Development Bank (NDB), also referred to as the Brics bank.

Eskom will get $180-million (R2.6-billion) over 12 to 20 years, for “transmission lines to evacuate 670MW generation and transformation of 500MW of renewable energy generation by IPPs in the country” said the NDB.

However this loan is just a small amount of what Eskom says it needs in the next 20 years.

“We as Eskom have said that between now and 2025 we are going to spend R213-billion on transmission lines across the country, R30-billion of this will be just for transmission lines from renewable energy plants,” said Eskom spokesperson Khulu Phasiwe.

The funds from the loan will mostly be used to connect households in areas where there is no electricity.

Part of the loan will be used to ensure that 44 companies are connected to the grid as part of the Renewable Energy Independent Power Producer Programme with sufficient transmission lines. 

Phasiwe said the large amount that Eskom wants to borrow is to enable the parastal&39;s future growth.

"We&39;re planning ahead for when the economy is booming again," he said.

The funds will also be used to reduce carbon dioxide (CO2) emissions by 2 million tons.

"The more renewables you increase in your energy mix, the less coal you need to use. Currently 86 percent of South Africa&39;s energy comes from coal," said Phasiwe.

A total of $81-million was awarded by NDB in the first phase, supporting 2,370MW of renewable energy capacity in South Africa, China, India and Brazil.

The projects are expected to lead to a reduction in greenhouse gases of 4 million tons a year.

The NDB said this is just the first batch of projects.

“There are many more in the pipeline, including projects from Russia. They are in various stages of consideration or appraisal,” said the bank.

The founding members of the bank, Brazil, Russia, India, China and South Africa have brought in a total of $1-billion of initial contributions.

On December 15 last year, President Jacob Zuma signed into law the New Development Bank Special Appropriation Bill, which allowed South Africa to contribute R2-billion from Treasury for the country’s first investment in the bank.

That same month, former finance minister Nhlanhla Nene was removed from office. Zuma later said he would be redeployed to a senior position in the Brics bank.

Until last week, Zuma reaffirmed this point in a written response to questions from DA MP David Maynier.

“I have publicly stated on several occasions that South Africa nominated Mr Nhlanhla Nene for the position of head of the African regional centre of the New Development Bank, also known as the Brics Bank. Processes to make an appointment to that position are under way under the aegis of the New Development Bank in Shanghai, China.”

However, on Monday morning investment company, Allan Gray announced that Nene would join its board as a non-executive director.

“We are very happy to have someone of Mr Nene’s experience on our board, and we are grateful that he chose to accept the appointment. We are looking forward to his strategic and leadership contribution to the board,” said Ian Liddle, chairman of the board.

Other recipients of the first phase of loans include:

1. Banco Nacional de Desenvolvimento Economico e Social (the Brazilian Development Bank), Brazil: Assistance of $300m for on-lending to projects for generation of 600MW additional renewable energy capacity in the country. CO2 avoidance – 1million tons.

2. Shanghai Lingang Hongbo New Energy Development Co, China: Assistance of local currency equivalent of $81m for generation of 100MW of rooftop solar power, subject to completion of domestic approval process. CO2 avoidance – 73,000 tons.

3. Canara Bank, India: Assistance of $250m, with a first tranche of $75m, for on-lending to projects for generation of 500MW additional renewable energy capacity in the country. CO2 avoidance – 815,000 tons.