State-owned power utility Eskom has described the R15-billion loan facility extended to it by the Development Bank of Southern Africa (DBSA) as another important step in closing its remaining funding gaps for a R550-billion-plus build programme to add some 12 300 MW to South Africa's electricity-stressed network by 2017.

The loan, which is the largest-ever extended by the State-owned bank to a single obligor, will be disbursed over a five-year period - the precise terms have not been disclosed.

Eskom CEO Brian Dames says that, together with the R60-billion subordinate loan from government, as well as guarantees set at R350-billion, the utility is "confident" that the platform is in place to close the remaining gaps through a combination of tariff increases and domestic and international borrowing efforts.

The company, which is already raising debt on the domestic capital markets, will, over the next "24 to 36 months" deploy the borrowing programmes necessary to fund its Medupi, Kusile and Ingula power stations, as well as new transmission infrastructure and maintenance projects.

In fact, Moody's Investors Service put out a note a day earlier, in which it said that it viewed the South African government's additional support "positively" and that government's decision should "broaden the company's funding options".

Eskom's Baa2 "rating and outlook are currently unaffected" - the rating agency sustained a negative outlook relating to bonds that are not guaranteed by the South African government.

Eskom's plans to close the remaining funding gap, which could peak at around R100-billion in the first three years, could be further bolstered by a possible "recapitalisation" of Eskom through a further equity injection.

Nevertheless, the guarantees in themselves would be sufficient to allow Eskom to approach the domestic and international bond markets and three banking partners, Bank of America Merrill Lynch, Absa-Barclays and JP Morgan, have been appointed to help it with the design and implementation of what will be a multibillion-rand international bond programme, which could kick off in the US early next year.

DBSA CEO Paul Baloyi insists, though, that, despite the size of the commitment, the loan would not reduce the amount of capital available for other pressing developmental projects, including projects at the municipal level.

However, he said that the bank was working with government to change its lending methodology from being project to programme specific to improve effectiveness and accelerate infrastructure delivery in the areas of energy, water and sanitation, healthcare and education.

He acknowledged that current disbursals, which fell 11,3% to R8,26-billion in 2010, from the R9,31-billion in 2009, were insufficient to deal with national, provincial and municipal infrastructure backlogs.

Through its new programmatic model, which would be aligned to departmental infrastructure aspiration, government budgets and grant schemes, DBSA felt that there could be a material increase in the number of projects implemented and in the level of funding.

The bank itself aims to disburse between R80-billion and R140-billion to infrastructure projects, social and economic over the coming five years, including between R20-billion and R30-billion to finance ‘green energy' projects.

The DBSA is, thus, working on its own fundraising plans, which could also see it approaching the debt capital markets at some stage.