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Maputo - The African Development Bank has lent $500m to fund power utility Eskom's multi-billion dollar expansion project, and to help the power-starved country achieve six percent economic growth from 2010, the bank said on Wednesday.
State-owned Eskom is battling to shore up electricity supplies due an economic boom which has boosted demand after decades of
underinvestment in the power sector.
The power crisis has scared investors and curbed the country's economic outlook as key platinum and gold mines continue to operate below full capacity and millions of homes and businesses are regularly plunged into darkness.
"A non-sovereign guaranteed long-term loan in the amount of UA (units of account) 333.04m (US $500m) was granted to Eskom
by the bank, with a repayment period of 20 years including a grace period of 5 years," said the African Development Bank's (AfDB) 2007 annual report.
African economic growth
The report was distributed at a conference in Maputo to discuss economic growth on the continent.
Poor infrastructure capacity and inadequate power generation is constraining economic growth in the world's poorest continent, and the AfDB said it is aggressively investing in projects which would help to reduce poverty and stimulate economic revival.
The bank said private sector funding approvals in 2007 rose to UA 1bn from UA 278.5bn in 2006, with loans dominated by infrastructure projects, followed by finance, industry and agriculture.
The Eskom loan was one of the five major private sector operations in 2007, with others including the Ambatovy nickel and cobalt project in Madagascar (UA 100m) and the Damietta port container terminal in Egypt (UA 94.3m).
"The bank's loan (to Eskom) is intended to assist the government in achieving the GDP growth target of six percent per annum from 2010," the report said.
Other objectives were to ensure security of supply and improve the Eskom's operational efficiency, while widening access to electricity from 72% of South Africans to 100% by 2012.
- Reuters