Africa Growing Together Fund provides $25 million loan for Eskom Transmission Network Improvement Project (Linked to Umbrella Project ID#36104)

On May 22, 2014, the African Development Bank (AfDB) and the People's Bank of China (PBOC) signed an agreement for the Africa Growing Together Fund (AGTF) (see Umbrella Project ID#36104). The purpose of this $2 billion loan facility was to finance large development projects in Africa between 2014 and 2024. The AGTF is sponsored by the PBOC and the administered by AfDB. Then, on November 27, 2018, AGTF signed a $25 million loan agreement (ID#5050200000351) with Eskom Holdings SOC Ltd (Eskom) is a state-owned power utility in South Africa — for the Eskom Transmission Network Improvement Project. On the same day, the African Development Bank (AfDB) issued a $193 million million loan (ID#2000200003053) to Eskom Holdings SOC Ltd (Eskom) for the same project. Eskom Holdings SOC Ltd (Eskom) also agreed to provide $37 million in counterpart financing. The borrowing terms of the AGTF loan is as follows: an 20-year maturity, an 5-year grace period, a 0.25% commitment fee, a 0.25% front-end fee, and an estimated interest rate of 3.664%. The purpose of the project is to construct 55 km 400kV transmission lines in the provinces of KwaZulu-Natal and Mpumalanga and aid Eskom's corporate restructuring and governance program. More specifically, the project involves the construction of a second 123 km 400 kV Ariadne – Venus line in the existing servitude; the construction of a second new 400/132kV multi circuit line for 116km from Ariadne until St Faith future take off and a further 53km from St Faith take off to Eros substation; the construction of a 72 km 400kV line from Kusile power station to Zeus substation; the construction of a 72 km 400kV line from Kendal power station to Zeus substation; the construction of a 1 x 400 kV feeder bay (primary and secondary plant) at Eros substation; the construction of a 2 x 400 kV feeder bay (primary and secondary plant) at Ariadne substation; the construction of a Busbar extension and the addition of a bus section at Ariadne substation; the construction of a 1 x 132kV feeder bay (primary and secondary plant) at Ariadne substation; the decommissioning of 2 x 275kV Feeder bays at Venus and Georgedale substations; substation equipment replacement at Duvha, Kendal, Minerva and Apollo substations (50+ bays); and the upgrading of the substation earth mat at the Kendal and Duvha substations. In February 2017, the AfDB carried out an environmental and social impact assessment of the project. The first loan disbursement took place on May 14, 2020. As of March 2021, the Kusile-Kendal and Kendal-Zeus transmission lines were complete. However, work on the Venus-Ariadne-Eros transmission line was delayed by contractor performance issues and the COVID-19 pandemic. The project’s originally expected completion date was June 30, 2022. However, as of March 2021, the borrower was preparing a project closing date modification to December 2023.

Additional details

1. Eskom Holdings SOC Ltd (Eskom) is a state-owned power utility that generates, transmits and distributes electricity to various regions in South Africa. 2. The AFDB project code is P-ZA-FA0-003. 3. AidData has estimated the all-in interest rate by adding 0.8% to the average 6-month LIBOR rate in November 2018 (2.864%).

Number of official sources

6

Number of total sources

6