The first major reaction to Eskom's pruposed tariff increases to help cover their R30 billion shortfall and the costs of the planned new power plants, was that they should look to bank loans and investment before they look to sabotage the South African economy. Thankfully Eskom seem to have taken this opinion to heart as they have recently gained loans to the value of about R7.8 billion from various local and international banks

Eskom Holdings Limited has negotiated and concluded Export Credit Agency (ECA) covered financing arrangements for Euro 705 million (approximately R7.8 billion) with 3 South African banks and 4 International banks. These loans, covered under Euler Hermes Export Credit Cover, will be used to fund part of the foreign content of the Kusile boiler contract with Hitachi Power Europe (HPE), which forms part of Eskom’s ongoing investment in infrastructure.

The loan agreements were signed between Eskom as borrower and the following lenders:

• Euro Floating Rate Facility: KfW IPEX-Bank, HSBC, The Bank of Tokyo-Mitsubishi UFJ, Ltd and Deutsche Bank;

• Euro Fixed Rate Facility : KfW IPEX-Bank; and

• ZAR Floating Rate Facility: The Standard Bank of South Africa Limited acting through its Corporate and Investment Banking Division, Nedbank Capital and Rand Merchant Bank, a division of FirstRand Bank Limited.

KfW IPEX-Bank acted as Documentation Bank, the ECA Agent and the Euro Floating Rate Facility Agent. The Standard Bank of South Africa Limited acted as the ZAR Floating Rate Facility Agent. Australia New Zealand Banking Group Limited (ANZ) acted as advisor to Eskom for the structuring and coordination of the transaction.

The loans are re-payable over 12 years starting six months after the commissioning of each of unit of the Kusile Power Station.

Eskom’s Acting Chairman Mpho Makwana emphasized that “Given the current status of the international financial markets, this financing is a critical component of Eskom’s plan that takes us closer to improved security of supply and economic success for South Africa."