Power utility company Eskom signed its first agreement worth US$500 million (almost R7 billion) with the China Development Bank this week.

The credit agreement will contribute towards Eskom’s current capital expenditure programme and if successfully executed, funding for its upcoming financial year will increase to R51 billion. The loan will also be paid over a three year period, however the terms and conditions of the agreement have not been disclosed.

The loan has come at an opportune time for the power utility after Futuregrowth, a Cape Town based asset management company, pulled the plug on funding Eskom after citing concerns over the management of state owned enterprises.

At the loan signing, Eskom Chief Executive Brian Molefe said that the conclusion of this agreement continues to demonstrate investor confidence in SA, despite recent volatility experienced in the local debt capital markets.

“The loan ceremony, which we celebrate today, will be the catalyst of many projects and developments which will lead to the prosperity of the South African nation,” he said.

Molefe said the deal would boost job creation and skills development, uplift communities, enhance Eskom’s key role of providing electricity in an “efficient and sustainable manner” and empower people through its build site projects.

Molefe said it has always been his vision to re-establish Eskom as “a catalyst for growth and not a constraint”, and described the company’s new partnership with the bank as a “direct catalyst for growth”.