Eskom has signed a R20 billion credit facility with a consortium of local and international banks.

The power utility says the government guaranteed facility will form part of the financing of Eskom’s current capital expenditure programme.

According to Interim Group Chief Executive Phakamani Hadebe the loan facility is a demonstration of the financial markets’ confidence in the utility’s turnaround strategy.

The terms of the facility are comparable to Eskom’s existing facility agreements and pricing is aligned to market benchmarks of similar structures.

Confidence in Eskoms’ turnaround strategy

“We view the successful execution of this facility as a demonstration of the financial markets’ confidence in Eskom’s turnaround strategy. We are cognisant of the challenges that are still ahead for the business and we are committed to ensuring that we expediently transition Eskom’s operational and financial profile to adequate standards,”Hadebe notes.

“Eskom remains a critical enabler for South Africa’s economic growth and it is critical that we attain maximum operational efficiency for the business to avoid negatively impacting the macro-environment,” he adds.

Resolving governance related issues

The utility’s acting Chief Financial Officer, Calib Cassim, says the credit facility demonstrates the willingness by financial markets to engage with Eskom.

“Concluding this facility with the suite of banks reiterates the renewed willingness by financial markets to engage with Eskom. The funding provides Eskom with sufficient liquidity to allow the company time to continue resolving its governance related issues and enables Eskom to recommence with its normal funding programme required to execute the FY2018/19 funding plan,” Cassim concludes.