Eskom coal

Eskom extend borrowing as Chinese bank prop them up with R20bn loan

State-owned company have captured themselves a financial boost

Eskom coal

Last week, new acting Eskom CEO Johnny Dladla revealed that Eskom had secured 77% of its funding requirements for the 2017/18 financial year.

Thanks to China Development Bank, they have taken a big step towards securing the full compliment, as the institution agreed to loan R19.87 billion to the energy giants.

Eskom is expected to use R43.6bn of its guarantee in 2016/17 and R22bn annually over the medium term, Treasury said in its 2017 Budget Review. Eskom has a R350bn guarantee for the 2016/17 year, with an exposure of R218.2bn.

Read: Eskom slashed R2.1bn fine for Optimum Coal after Guptas bought the company

The borrowings come despite the power utility being downgraded by rating agencies this year, after Moody’s, S&P and Fitch cut South Africa’s sovereign credit ratings.

Dladla remained positive about Eskom’s financial state, despite current economic troubles:

“We remain resolute that we will fully execute the required funding for the year, albeit under challenging market conditions. Our liquidity levels remain healthy and Eskom’s financial profile continues to improve and stabilise.”

“Backed by the availability of the government guarantees and the stable financial profile, we do not foresee significant impediments in the execution of the remainder of the FY17/18 funding requirement.”

Read: Eskom board ordered to rescind the reappointment of Brian Molefe

The acting CEO also went on to say that Eskom had increased its borrowing over 20167/17 to more than R60 billion.

The Treasury stated in their Budget Review that borrowing from foreign sources will account for a majority of funding in the medium term.