Eskom’s China loan facility not in jeopardy – Public Enterprises

The Department of Public Enterprises says that power utility Eskom’s multi-billion rand loan facility with the China Development Bank is not in jeopardy, despite concerns sparked by a delay in the release of a R7bn tranche of funds last month.

The bank was meant to release the funds - part of a larger R35bn facility - in April.  Absa Capital had to provide assistance after the loan failed to come through in time. 

A Treasury report signed by Finance Minister Tito Mboweni in April said the delay in releasing the funds was due to Chinese exchange control requirements.

According to Chris Yelland, investigative editor at EE Publishers, however, the delay may have in fact resulted from "Chinese concerns as to whether Kusile would in fact proceed to completion, which was something Eskom and DPE had said they were still investigating."

Eskom spokesperson Adrian Lackay told Fin24 via a statement on Friday morning that the loan agreement with the CDB remained a binding agreement. It was concluded in July 2018 during the Brics summit in Johannesburg. 

"I am advised that neither the loan facility nor the R7bn drawdown that Eskom wants to access at this time, are in jeopardy," said Lackay. 

He said one condition of the CDB loan agreement is that it be used only for capital expenditure, under government guarantee, and not for operational expenses.

"It must be emphasised, for the sake of clarity, that this, or any other loan, is in no way connected to the issue of equity in any of our state-owned enterprises," Lackay said.

Lackay added that the South African government – through National Treasury, the Department of Public Enterprises and Eskom – were working through the administrative aspects of the loan facility, including approvals for transfer from the CDB and receipt by Eskom.