The President of the National Development Bank (NDB) K.V Kamath revealed plans to help out the flailing utility, with a bailout nearing the $1bn mark.
This could be a short-term remedy to the crisis.
According to Bloomberg report, the bank is in talks with the government about loans that could alleviate some of the pressure on the country’s electricity grid.
Who are Brics?
Brazil, Russia, India and China all form the Brics organisation along with South Africa, and the bank serves as a collective pot for all member states. The fund is primarily used for infrastructure projects, and with Eskom’s facilities effectively crumbling, they qualify for a cash injection.
In 2014, all parties resolved to create the National Development Bank, raising $50 billion in capital to get things off the ground. The reserve is shared among all five nations, and other developing economies are welcome to apply for loans and financial support. Kamath told the publication why it was time to intervene:
“Power is now a critical element in South Africa’s infrastructure and at this point in time it is imperative that we work with the government in alleviating this problem.”
“We are equally clear that this won’t happen overnight, so there is always a need to extend a hand during the transitioning process and that’s what we are doing.”
As the World Economic Forum summarise, the core purpose of the NDB is to mobilize resources for infrastructure and sustainable development in Brics countries. The Bank is fully controlled by its members who all represent the borrowing countries, and this is very much South Africa’s hour of need.
But just how will the loan work, and where is the money going? This is what we know so far…
How much money Brics will give to Eskom
$480 million / R6.9 billion: Retrofitting desulfurization equipment to make the under-par Medupi power plant compliant with new environmental standards.
$300 million / R4.3 billion: That will go towards increasing Eskom’s limited storage capacity.
$780 million / R11.2 billion: This is the total Brics will spend on their first loan instalment to Eskom
There is also the potential for a $180 million / R2.6 billion loan to finance two more projects in 2019, including repairs to the battered transmission lines that have also added to the load shedding misery.
As we were told by energy expert Ted Blom, Eskom did plan to increase their storage capacity back in 2008. However, their plans were rejected, then never re-submitted. That lackadaisical attitude has come back to bite them on the arse spectacularly, some 11 years later.
Could this be Eskom’s get-out-of-jail-free card? Their debts are rumoured to be nearing the R400 billion mark, so even a donation as generous as this looks like it’ll be a drop in the water. But for the short-term, any assistance that offers to end the nightmare of rolling blackouts must be received gleefully.