Agence Française de Développement signs R 1,5 billion loan agreement with Eskom to support investments in power grid.

Eskom and Agence Française de Développement (AFD) have signed a R 1,5 billion loan agreement to support the electricity utility’s investments in extending and strengthening its power transmission grid along the west coast of South Africa.

This loan constitutes the first tranche of a R 6.5 billion multi-tranche loan facility signed between the two institutions in March 2017.

The transmission system plays a pivotal role in the nation-wide provision of electricity, as it delivers electricity from the power stations to distribution centres across South Africa.

This first tranche will be dedicated to financing of the Namaqualand Strengthening Phase 2: Juno Gromis Project, which aims to strengthen the power network in the Northern Cape Province, integrate renewable energy sources, and ultimately facilitate cross border transmission.

The project will include the construction of a 282 km 400 kV line between the Juno substation in the Western Cape Province and Gromis substation in the Northern Cape Province, with associated feeder bays and transformer bays. Construction is expected to start in early 2019.

The loan facility from AFD aims to support Eskom’s investment policy in strengthening its high-voltage electricity network, in order to ensure the integration of planned or under-construction renewable energy sources.

This is in line with Eskom’s Transmission Development Plan 2019-2028 (TDP) investment of R91 billion (EUR 5.5 billion) for the construction of 6 535 km of high voltage lines, and the installation of 45 900 MVA of additional transmission capacity.

“This multi-tranche loan facility will contribute to Eskom’s plans to strengthen and refurbish the transmission infrastructure while diversifying our funding structures.

“AFD remains part of a core of longstanding partners to Eskom, and we regard the signing of this loan agreement as a formal yet symbolic gesture of a sustainable partnership in aiding Eskom to enhance the security of supply, and stabilise the power systems in South Africa. We look forward to executing future opportunities with AFD”, says Phakamani Hadebe, Eskom’s Group Chief Executive.

“This investment will enhance the reliability and security of electricity supply, improve the network capacity for future load growth, and will ultimately strengthen regional energy trade which is a very positive development for the region”, says H.E. Christophe Farnaud, Ambassador of France to South Africa.

“AFD’s funding to Eskom reaffirms our commitment to support the public utility’s efforts to diversify its energy mix, which will ultimately strengthen its capacity to respond to the growing energy needs of South Africa while addressing the climate change challenges attached to it. This funding also demonstrates our support to Eskom in a period of transition and recovery,” says Bruno Deprince, AFD’s Regional Director.

AFD is reviewing a number of project parts in Eskom’s TDP for the subsequent tranches of the multi-tranche facility by 2020.

Eskom and AFD have been partners since 2011 and have collaborated on: power transmission projects in Kwa-Zulu Natal, Limpopo and Eastern Cape provinces; the construction of the 100 MW SERE wind farm in the Western Cape province and; a capacity building project that resulted in an MOU between Eskom and Electricite de France aimed at transferring French expertise on renewable energy.