R1.5bn loan will not be for new power stations, says cash-strapped Eskom

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Cape Town - Eskom says a R1.5 billion loan agreement signed with the French Development Agency will not have a significant impact on improving its power struggles.

The power utility, which is almost R500bn in debt, announced on Thursday that it had entered into an agreement to support its plans to build more transmission lines on the West Coast. Eskom spokesperson Khulu Phasiwe, however, said the money was designated to a different project, which would not significantly improve the ongoing power struggles at the state-owned entity. “It’s mainly for the installation of transmission lines. We have a lot of renewable energy programmes happening on the West Coast and we have to connect these projects to the national grid. This money is going towards this project. “It is not going to Medupi or any other power station, it is just to connect the new project on to the grid. We are connecting new people on to the grid. The more infrastructure you create, the heavier it becomes to connect people to the grid,” said Phasiwe. Eskom has been battling since last month to keep the lights on, prompting more calls to privatise the power utility.

The cash-strapped Eskom supplies about 90% of the country’s power by burning coal, and it has in the past days struggled to keep the lights on. Ten of the country’s 15 power stations have less than 20 days’ coal supply, five of those have less than 10 days’.

In July, the power entity signed a $2.5bn (R33.4bn at the time) loan from the Chinese Development Bank, ahead of the 10th BRICS Summit in Johannesburg.

From this loan, which had its sole objective to better Eskom’s power stations, Phasiwe said the entity would start reaping the benefits soon.

“The loan we got from China said the money will go to Medupi power stations.

“The fruits of this loan will, however, depend on the different stages. Between now and 2021, Medupi will have six power-generating units. Three of them are already connected to the grid. The remaining three, we are still working on them,” said Phasiwe.

During an interview on Radio 702 on Friday, President Cyril Ramaphosa said he would announce a team of experts to deal with Eskom’s woes.

“I’ll be announcing a task team that is going to be looking at Eskom in terms of the current difficulties which will also strengthen what management is doing. We’re also going to look at Eskom’s business model.

“We will look at how to best position Eskom. We’re going to look at the funding model of Eskom going forward, and we’ll look at how we should structure Eskom,” said Ramaphosa.

Phasiwe said Eskom could not guarantee a festive season that was not marred by load shedding, but he said the entity anticipated that there would be fewer power outages because of reduced demand.

“From today, a lot of companies are closing down for the festive season. We are not going to have a lot of electricity demand. This will give us some breathing space for us to do maintenance between now and the first week of January.”

Political Bureau