Johannesburg — POWER supplier Eskom has signed an export credit financing loan agreement with Germany's KfW IPEX-Bank for about R2,8bn, to partially finance the six boilers that the Hitachi consortium will supply to Eskom's Medupi power station in Limpopo.

Due for commissioning in 2012, the 4788MW Medupi coal-fired power station -- in Laphalale, Limpopo -- will be the first base load power station to come into operation since the construction of Majuba power station in the late 1980s.

It is part of Eskom's multi-billion rand build programme to increase electricity capacity. The power station's six units will be commissioned at nine-monthly intervals, with the last unit scheduled for 2015.

Eskom says the loan is payable over 12 years after the commissioning of the units.

KfW IPEX-Bank and HSBC Bank arranged the export finance cover from German export credit agency Hermes .

Eskom outgoing finance director Bongani Nqwababa and KfW IPEX-Bank first vice-president Peter Purkl signed the agreement.

Hitachi Power Africa chief financial officer Robin Duff yesterday said the manufacturing of the boilers was on course to commence in November. "The design of the boilers is also well advanced. It is being done in Germany," Duff said.

The total of the design, building, supply and commission of the units, is about R20bn, according to Hitachi, who will also provide boilers to Eskom's six-unit 4818 Kusile power station in Mpumalanga.

Eskom has turned to domestic and foreign markets to fulfil its multibillion rand funding requirements. Spokesman Fani Zulu said yesterday the utility will diversify its sources of funding internationally, using different geographies, maturity periods and funding instruments.

The instruments include syndicated loans, bonds and export credit finance. In diversifying its geographical spread of funding sources, Eskom has added South America and Middle East to targeted markets.

Zulu said Eskom would, from time to time, embark on road shows to meet key players in the domestic and foreign markets. "We are engaged in a 25-year (capacity expenditure) programme. Thus, we need to have a relationship with the market. We have always had road shows, even when we did not have a funding requirement. Now we have embarked on a build programme, it is important that the market has access to Eskom."