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Eskom secures R33.4bn loan from China’s Development Bank

The loan agreement was signed on Tuesday after high-level talks led by President Cyril Ramaphosa and his Chinese counterpart Xi Jinping.

FILE: Eskom CEO Phakamani Hadebe briefs the media on the power utility's financial standings. Picture: Kayleen Morgan/EWN

JOHANNESBURG - Eskom has secured R33.4 billion loan from China's Development Bank, just a day after conceding that its irregular expenditure has ballooned to over R19 billion.

The loan agreement was signed on Tuesday after high-level talks led by President Cyril Ramaphosa and his Chinese counterpart Xi Jinping.

Eskom chief executive Phakamani Radebe says the government-backed loan of $2.5 billion was part of the power utility’s effort to secure funding to stay afloat this year.

Radebe says the loan showed there’s confidence in Eskom’s new leadership after the board was appointed in January this year.

"The mere fact that we’ve been able to go out there, clean the place, identify all those places that need to be cleaned and say 'this is what we have to account for', is in an indication of our direction.”

He says despite the R19 billion lost through irregular expenditure, a turn around plan is in place.

The funds secured from the Chinese state-owned bank will be used for the construction of the Kusile Power Station.

The cash-strapped power utility says the loan will increase its liquidity.

Eskom’s group treasurer Andre Pillay says the loan that will be effective from Tuesday will help bolster Eskom’s financial stability.

“This will certainly bolster the liquidity of Eskom and put Eskom in a comfortable position to execute on its capital plan.”

Hadebe has assured South Africans that Eskom will fund the repayment of the loan itself.

“The borrowing that we spoke about of R72 billion, of which R2.5 billion is part of it, will come from our own operations.”

Hadebe said the loan from the Chinese means Eskom has now secured 62% of funding for this financial year.

(Edited by Winnie Theletsane)