The French Development Agency (AFD) has agreed to provide South African power utility Eskom with a multi-tranche 6 billion ZAR ($477.7 million) credit facility.
The facility is intended to support Eskom’s plans to improve and expand its power grids. The funds will be used to strengthen transmission lines and substations linked to large-scale renewable energy power plants, AFD said.
The funds will be provided over a three-year period, and will be devoted to projects which are part of Eskom’s grid improvement plan, projects for the integration of renewable energy and projects for the development of transnational grids.
This is not the first time that AFD has supported Eskom. In 2007, the agency provided a €100 million loan for the construction of a wind power plant, while more recently it granted Eskom a €150 million loan for the improvement of its distribution network.
The AFD noted that Eskom has entered into a partnership with France’s largest utility Electricité de France (EDF) in November 2015.
The development of large-scale solar and renewable energy projects under the country’s Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) has been slowed down by Eskom's grid and financial issues over the past three years.
In 2015, the South African government provided the utility, which is the only entity in the country entitled to buy renewable energy power under the REIPPP program, with ZAR 23 billion ($1.75 billion) in funds to help the company stabilize its precarious finances.
In February 2017, the South African government said that it intends to continue the REIPPPP program. In its 2017 Budget Review, the country’s Ministry of Finance stated that Eskom “will sign outstanding power purchase agreements for renewable energy in line with procured rounds”.
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