The African Development Bank (AfDB), which has extended loan facilities worth a collective R20-billion to South Africa’s power utility Eskom, expressed confidence on Tuesday that the new leadership at the State-owned company would restore the group’s governance and creditworthiness.
AfDB VP for power, energy, green growth and climate change Amadou Hott said: “We have supported Eskom strongly in the past and we intend to strongly continue supporting Eskom. With this new leadership, many things will happen over the next few months and that will be very positive.”
Hott’s statement came against the backdrop of a severe liquidity crunch at Eskom, which resulted in the Public Investment Corporation (PIC) advancing an emergency one-month loan of R5-billion to help the utility avoid a default, as well as to provide it with time to raise R20-billion from commercial lenders to help it meet looming debt obligations.
The AfDB statement also followed news that the Institute for Accountability in Southern Africa had written to Eskom chairperson Jabu Mabuza requesting a detailed written explanation as to why the current board believed that, given its financial distress, the utility was not trading “recklessly” and in breach of the Companies Act.The utility added that a review by independent auditors Sizwe Ntsaluba Gobodo found nothing to indicate the statements were not prepared in line with requirements.Sizwe Ntsaluba Gobodo concluded that the board was satisfied that Eskom had access to adequate resources and facilities to be able to continue its operations for the foreseeable future.
Hott argued that the lack of creditworthiness of African power utilities was a major constraint to addressing the continent’s electricity backlogs, pointing to a World Bank report that found only two of the continent’s 39 power utilities to be creditworthy.For this reason, Africa’s utilities had to be transformed to have the “best managers, the best staff, the best governance” and to make them “bankable”.
AfDB was paying increased attention to improving energy access on the continent, having included power and lighting as the main priority in its ‘High 5’ campaign, which includes agriculture, industrialisation, transport and improving citizens’ quality of life.Likewise the bank will champion a more “aggressive” uptake of both off-grid and utility-scale renewable energyprojects in light of the steep fall in the costs of technologies such as solar photovoltaic and onshore wind.
