Eskom has managed to secure a R5 billion loan from the Public Investment Corporation (PIC).

In a statement released on Monday the PIC and the Government Employees Pension Fund (GEPF) said that it had agreed to advance a R5 billion ridging facility to Eskom for one month in order to fund the company’s operation for the month of February.

The PIC was approached by Eskom, which indicated that it was experiencing enormous liquidity constraints, which were threatening the company’s growth status.

“Following the request, the PIC conducted its own due diligence and obtained approval in line with its mandate and corporate governance requirements. The GEPF and PIC Board take comfort from the fact that the bridging facility is fully backed by a government guarantee and that the pricing for this transaction is favourable to GEPF,” said the PIC.

Encouraging changes

The PIC and the GEPF said they are encouraged by the recent changes in the governance of Eskom. In January, government announced the appointment of a new board so as to bring stability to the utility.

“The GEPF and the PIC are encouraged that the new Eskom Board and the new management team have moved with the necessary speed to restore good corporate governance at Eskom. The utility announced their interim financial statements last week, which had previously been delayed, in a frank and transparent manner,” said Chief Executive Officer at the PIC, Dr Daniel Matjila.

In addition to the bridging facility, Eskom has approached other lenders as the utility needs a total funding of R20 billion.

Meanwhile, three commercial banks have indicated that they are willing to further extend credit facilities to Eskom subject to the outcome of their respective due diligence processes, which are currently underway.