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Ramaphosa lifts veil on some Eskom-China loan details

Oct 30 2018 11:24
Lameez Omarjee, Fin24

President Cyril Ramaphosa has lifted the veil on the loans extended to state-owned enterprises Eskom and Transnet by the China Development Bank.

In a written reply to a question posed by DA MP Alf Lees, Ramaphosa clarified the time frames available to the entities to repay the loans.

There has been public outcry for government to reveal the conditions of the loans to the entities. The Standing Committee on Finance has similarly asked Finance Minister Tito Mboweni to reveal why the terms of the Eskom loan had been kept secret.

In July this year Eskom secured a R33.4bn loan from the CDB.

"The facility has a grace period of five years and thereafter the principal amount is repayable by Eskom in 20 instalments over a period of 10 years. There are no specific conditions for this loan," said Ramaphosa.

Transnet entered into a R4bn loan agreement with the Industrial and Commercial Bank of China, in July. The purpose of the loan was to finance "general operating activities and certain capital expenditure", the president said.

"The facility is a five-year, rand denominated, quarterly amortising loan, at a floating and competitive interest rate. The loan came with terms and conditions that are standard for this type of loan," said Ramaphosa.

Transnet echoed this in a previous response to Fin24 that the loan repayment was over five years and that the loan would assist in its liquidity requirements in the near term.

"In addition, there were agreements signed between private sector companies of China and those of South Africa. The conditions attached to each of these agreements are a matter between the respective parties," he added.

Ramaphosa also clarified that the number of agreements signed between the two governments, state entities and private companies during state visits by respective presidents reflect a commitment of $15.2bn. Either as equity investments or loans for industrial sectors, mining, infrastructure and services.

"The funding will, among others, support cooperation on special economic zones, trade and investment relations and financing for state owned entities," Ramaphosa said.

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