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Terms of Chinese loan to Eskom still confidential, says Ramaphosa

Sep 11 2018 16:16
Khulekani Magubane

President Cyril Ramaphosa reassured members of the National Council of Provinces that Eskom would not be taken over if it defaulted on its $2.5bn (R33.4bn at the time) loan from the Chinese Development Bank.

Ramaphosa was replying to members’ questions on Tuesday afternoon.

The question came from Democratic Alliance member Cathleen Labuschagne, who asked for the terms of the Chinese state bank's loan to Eskom, as well as a separate R4bn loan to Transnet. 

The DA announced over the weekend that it would make an application in terms of the Promotion of Access to Information Act to get access to the full loan agreement.

The power utility signed the $2.5bn loan with the bank in late July ahead of the 10th Brics Summit in Johannesburg. At the time it was worth R33.4bn. Transnet concluded a separate R4bn loan with the Industrial and Commercial Bank of China.

On Tuesday Ramaphosa said it was not unusual for state-owned entities, such as Eskom, to raise capital in the market for purposes including infrastructure development.

“Eskom got into a deal for R33bn which will be used to fund the construction of Kusile coal power station. The facility has a grace period of five years and is repayable by Eskom in 20 installments over a period of 10 years,” said Ramaphosa.

Ramaphosa said the China Development Bank facility is more competitive than the global market rate, but did not provide details.

He said the conditions of the loan agreement could not be made public as they are subject to confidentiality clauses, and would put Eskom at a disadvantage when pursuing more funding from the markets.

“We are very jealous of our assets and will not hand them over to any other country or any other entity. That, I can assure you. Eskom has entered into loan agreements with the African Development Bank, World Bank and has always maintained our sovereignty,” Ramaphosa said.

'Quite insulting'

DA member Jacques Julius asked Ramaphosa whether the ANC would help itself to the funds from the Chinese Development Bank ahead of next year’s general election.

Ramaphosa took clear exception to the question, refusing to answer it.

“I don’t know if that question deserves an answer. It is quite insulting, honest. We are trying to advance the interests of the country and you are suggesting that we are looking to advance the interests of the party. It really does not deserve an answer,” said Ramaphosa.

He later said the DA displayed a brazen prejudice against China as a financial partner for South Africa's development, adding that if a western organisation offered the same loan it would not be viewed with such scepticism.

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