The President of New Development Bank, Kundapur Vaman Kamath said the bank has approved around $790 million of loans for three projects in South Africa. He noted that over half of the loan will be directed to power company Eskom.
Eskom, South Africa’s power company is battling for its survival after a decade of steep financial decline during which its costs soared and electricity sales stagnated.
President Cyril Ramaphosa promised a 69 billion rand ($4.86 billion) bailout for Eskom over the next three years and says the company will be split into three to make it more efficient. But the cash-strapped utility is still hunting for more money to improve its finances.
A source at the New Development Bank, which was set up in 2014 by Brazil, Russia, India, China and South Africa, said that around $480 million of the new funding was for Eskom’s Medupi power plant project in the north of the country. The source revealed that the rest of the money would be split between the Lesotho Highlands water project and a renewable energy venture.
Problems at Medupi, which will be one of the largest coal-fired power stations in the world when complete, are partly responsible for the latest round of power cuts which Eskom implemented this year.
At the New Development Bank’s annual meeting, Kamath said “we plan to end the year with total loan approvals of about $2.3 billion in South Africa”.
The Director General of South Africa’s finance ministry, Dondo Mogajane confirmed part of the approved funding was for desulphurisation equipment at Medupi.