East African Business Week (Kampala)
Geoffrey Kamali
13 August 2007
Nairobi — The African Development Bank (AfDB) has approved a US$ 500 million loan to South Africa, clearly the biggest loan ever to be granted to the private sector, to help enhance her power utility capacity.
The loan, awarded through AfDB's Private Sector window to the national electricity company, Eskom Holdings, will boost its ability in the generation, transmission and distribution infrastructure all over the country.
Eskom, one of the Southern Africa Power Pool (SAPP) members, also operates in Tanzania and Uganda. The pool arrangement allows Eskom to convey power transmission via other member's networks.
The bank says after two decades of power surplus, South Africa is for the first experiencing a closely matched power supply and demand.
"Currently the utility's reserve margin is between 8% and 10% down from 25% in 2001. This unprecedented situation has revealed the significant investment Eskom needs to make to align its capacity growth with the South African Government's Accelerated Growth Initiative (ASGISA)," says an AfDB statement.
The AfDB investment program is part of an estimated USD 20 billion over a five-year period, intended to support the ASGISA targeted growth rate of 6% by 2010.
Since 1997, the Bank has approved a total of eight private sector operations amounting to approximately US$560 million in South Africa, and one regional project covering South Africa and Mozambique.
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