Power utility Eskom, on Thursday, signed a $1.5 billion (19.6 billion rand) loan agreement with China Development Bank to finance the Medupi coal power plant.
The loan is the second tranche of a $5 billion funding facility Eskom requested, having signed a $500 million credit facility with China Development Bank in 2016.
The loan is Eskom’s funding requirement for 2017/18 financial year and would be paid back over 15 years, according to chief financial officer Anoj Singh.
In 2008, the African Development Bank lent $500 million for the construction of Medupi coal power plant. In 2010, the World Bank agreed to lend South Africa $3.75 billion to assist with several energy projects, with $3.05 billion mapped out for the completion of the power station.
Eskom's Interim CEO Johnny Dladla welcoming guests ahead of signing a $1.5bn loan agreement with the China Development Bank. pic.twitter.com/HsWpSGnj4B
— Khulu Phasiwe (@KhuluPhasiwe) July 6, 2017
Eskom’s debt is currently 300 billion rand but it’s expected to peak at 500 billion rands.
Eskom’s acting CEO Johnny Dladla told reporters that the loan will aid Eskom in ensuring that it completes the Medupi project and ensure the security of energy supply. He disclosed that Eskom has secured 77 percent of this fiscal year’s funding requirement to date and expects to meet the required funding for the year.
Medupi Coal Power Plant: Here’s what you need to know
- The power Station is a dry-cooled coal-fired being built by Eskom.
- Its original design was changed at a late stage in 2007. Before then, it was conceived as Project Alpha in 2007, with only three units to total 2400MW and cost R32 billion.
- It is situated near Lephalale in Limpopo province.
- Medupi is a Sepedi word for “rain that soaks parched lands”.
- The power station is expected to become the largest dry-cooled coal-fired power station in the world when completed with six boilers each powering an 800 MW turbine, producing 4800 MW of power.
- Most people have criticised the construction of the power station. They alleged that the ANC-led government pushed the project forward because the ruling party holds a 25% share of the venture.
- Eskom has placed a contract with Exxaro’s Grootegeluk coal mine to supply 14.6 MT of coal to Medupi per year for 40 years. Exxaro is located north of the site.