Germany’s KfW finances South Africa’s grid enhancement with $100 million


German government-owned development bank, KfW has agreed to provide South African power utility Eskom with ZAR 1.35 billion (around $100 million) in funds for the improvement of the transmission network in the Eastern Cape region, where several large-scale renewable (mostly wind) power plants are located.

The grid enhancement, Eskom said, is intended to enable the integration of several new renewable energy projects that were recently resumed, thanks to the signing of the related outstanding PPAs under the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP) by the South African Department of Energy.

Especially the areas of Harrismith in the Free State and the Greater East London will be touched by the improvement plans. “The facility demonstrates the improved market sentiment and confidence in the ability of the Eskom’s leadership to direct the company on the correct path to recovery and sustainability,” said Eskom CEO, Phakamani Hadebe.

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“The signing of this loan facility is a positive contribution towards the successful execution of Eskom’s ZAR 72 billion funding requirement for FY2018/19”, the utility also stressed. Its financial situation, on the other hand, has been particularly difficult over the past years, and this was the reason for the several-times delayed signing of the aforementioned PPAs. In order to rescue it, 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.

The financing now coming from Germany is adding to the multi-tranche 6 billion ZAR ($477.7 million) credit facility granted by France through the French Development Agency (AFD) last year.

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