Programme Expected to Boost Electricity Generation Capacity in Africa by Nearly 10%
LONDON, 18th July 2016 – Milbank, Tweed, Hadley & McCloy LLP has advised the African Development Bank (AfDB) on US$1.34 billion loan facilities for South Africa’s power utility (Eskom) to support its capital expenditure programme, which includes investments in new generation, plant refurbishment, transmission lines, and capacity building in excess of US$ 17 billion to help increase energy reliability in South Africa and in the southern African region.
By 2020, Eskom's capital expenditure program is expected to increase South Africa's electricity generation by nearly 11,000 MW and expand its transmission network by over 9,500 Km. Following the success of South Africa's Renewable Energy Independent Power Producer (REIPP) Programme, which is expected to increase electricity generation by a further 5,000 MW by 2019, AfDB's investment will be partly directed at the construction of the transmission network required to evacuate power from South Africa's IPP programs.
The aggregate US$1.34 billion loan facilities included US$965 million raised through participation arrangements with nine commercial banks, which include: Bank of China, Bank of Tokyo-Mitsubishi, CaixaBank, Citibank, HSBC, JP Morgan Chase, KfW IPEX Bank, Siemens Bank and Standard Chartered. This constitutes the largest syndicated A/B Loan arranged to-date in Africa. There was also a parallel South African Rand loan.
The Milbank financing team included partner Phillip Fletcher and senior associate Nike Johnson. Partner Michael Nolan and associates Erin Culbertson and Elitza Popova-Talty advised in relation to issues of public international law.
Phillip Fletcher said: “the integrated financing represents one of the largest A/B structured loans ever undertaken by a multilateral agency and demonstrates AfDB’s ability to help mobilise large-scale financing. We are proud to have supported AfDB on this landmark transaction, which is an important step in its New Deal on Energy for Africa, a partnership to help achieve universal access to energy in Africa by 2025.
