BRICS Bank approves R6bn for Eskom project
The board of the New Development Bank (NDB) has approved funding of R6bn for a battery storage project at Eskom.
An Eskom spokesperson told Fin24 on Tuesday that the R6bn from the NDB is not the full amount of the project. It is just a portion that NDB is financing. The rest of the funding needed for the project will financed by other development finance institutions.
The NDB was established in 2014 by the BRICS countries (Brazil, Russia, India, China and South Africa) to mobilise resources for infrastructure and sustainable development projects in BRICS and other emerging economies and developing countries. Its funding is to complement the existing efforts of multilateral and regional financial institutions for global growth and development through public or private projects.
The R6bn funding to Eskom is, therefore, in line with the bank's general strategy of supporting infrastructure and sustainable development projects, the NDB said in a statement issued at the end of last week.
The funding to Eskom is for setting up a battery energy storage system. The system will comprise a total of 360 MW of distributed battery storage sites across four provinces in South Africa.
According to the NDB statement, the project is primarily aimed at meeting peak electricity demand, increasingly through renewable energy, and avoiding emissions associated with the utilisation of fossil fuels.
The NDB's financial support for this project will be provided along with World Bank and African Development Bank. The NDB received AA+ long-term issuer credit ratings from S&P and Fitch.
At the bank's 4th annual meeting, which took in Cape Town in April this year, the NDB said it sees various opportunities in SA and indicated it would scale up its projects in the country over time. At that time the bank had already given assistance of about $1.5bn to South Africa.
Bloomberg reported in March this year that the NDB plans to lend as much as R11.2bn to Eskom in 2019 for infrastructure projects. At that time Eskom had also entered a period of load shedding.
In April this year Fin24 reported that the NDB's decision to finance the second phase of the Lesotho Highlands Water Project ties in well with Finance Minister Tito Mboweni's call for the bank to fund more infrastructure projects in Southern Africa. Mboweni's call went out at the end of the NDB annual meeting.
Three of the five new projects approved for funding by the NDB at that time are South African. The three new South African projects that were approved by the NDB at the time were for Eskom, the Industrial Development Corporation (IDC) and the Trans-Caledon Tunnel Authority (TCTA). At the time it was said the NDB would provide a $480m (about R6bn) project loan to Eskom for an environmental protection project for the Medupi Thermal Power Plant.