Johannesburg — ESKOM had concluded a R13bn export credit agency loan with five French banks to finance part of the Medupi and Kusile turbine contracts with Alstom S&E Africa, the power utility said yesterday.

With the global financial crisis restricting access to international credit markets and domestic funding for its R385bn capital expansion programme in short supply, the export credit agency loans have become an important source of funds for Eskom.

An export credit is a loan, finance or guarantee provided by a government or financial institution that enables companies to export goods and services where payment for them could be subject to risk. They make it cheaper and less risky for companies to export or invest overseas.

Eskom said yesterday that COFACE, the French Export Credit Agency, had covered the loan. "The facility agreements were signed between Eskom as borrower and five French banks, BNP Paribas, Calyon, Société Générale, Natixis and CIC, as lenders. BNP Paribas (also) acted as documentation bank, facility agent and (export credit agency) agent," Eskom said.

The loan was payable over 12 years after the commissioning of the relevant units of the two power stations. The first unit of the 4800MW Medupi is due for commissioning in 2012.

Eskom has delayed commissioning the first unit of the 4800MW Kusile power station by a year to 2014.

This is the second export credit agency loan Eskom announced this month . Earlier this month, it concluded a R7,8bn loan with three South African banks and four international banks. It said at the time that these would be used to fund part of the foreign content of the Kusile boiler contract with Hitachi Power Europe.

Lenders in the transaction included KfW IPEX-Bank, HSBC, The Bank of Tokyo-Mitsubishi UFJ, Deutsche Bank, Standard Bank , Rand Merchant Bank and Nedbank Capital.

This May, Eskom concluded a R6,1bn export credit agency loan with seven European banks.

Together with loans from development finance institutions, such as the World Bank and the African Development Bank, the export credit agency loans keep Eskom's hopes of financing its multibillion-rand capital expansion programme alive.

Last month, the African Development Bank provided Eskom with a R20,7bn loan for the utility's growth programme.

The World Bank is still mulling over the utility's application for a 3,75bn loan.

Eskom has said it expects the bank to make a decision in the first half of next year. The World Bank loan will fund projects at the Medupi power station and renewable energy and low-carbon energy efficiency programmes.

Media reports earlier this month quoted a World Bank official as saying the financier could take a decision on the loan as early as next March. The official reportedly said the loan proposal would be presented to the World Bank board in March.

Eskom is awaiting the outcome of its application for annual tariff increases of 35% a year for the next three years.

The National Energy Regulator of SA (Nersa) is scheduled to hold public hearings on the application next month.

Nersa has said it will make its determination in February.