By Phumza Macanda

JOHANNESBURG, Nov 10 (Reuters) - South Africa's state-owned utility Eskom said on Monday it had signed a $500 million 20-year loan with the African Development Bank to support its long-awaited power expansion programme.
Eskom, which provides 95 percent of the country's power, has been rationing electricity since January, when the national grid nearly collapsed, affecting major industries, including mining.
In its bid to reverse years of underinvestment in power, and to ease chronic power shortages, Eskom plans to spend a total of about 343 billion rand ($34.95 billion) over five years on new power plants.
This task has been made more daunting by the global credit squeeze and a downgrade of Eskom by rating agency Moody's, but Eskom says it is faring on well.
"The extent and timing of the AfDB loan reinforces the extent to which institutions based on the continent can provide support which fosters growth," Eskom's Chief Financial Officer Bongani Nqwababa said at a press briefing.
"This loan will make sure that infrastructure development is going on in Africa regardless of the financial crisis," Eskom's Chief Executive Officer Jacob Maroga said at the press briefing.
The South African government has said it would loan Eskom 60 billion rand over the next three years, while the utility would raise further funds from capital markets, higher power tariffs or loans with development agencies such as the AfDB.
Mandla Gantsho, the AfDB infrastructure head, said the bank did not insist on a government guarantee for the loan because it considers Eskom to be "a smart and strong partner."

Eskom's Nqwababa said the utility has so far raised a total of 19 billion rand), and was confident it could raise the 11 billion rand needed to meet its 2008 target of 30 billion rand.
"We are comfortable we will be delivering on that," he told reporters.
Even though the AfDB had made the loan available for Eskom to draw from immediately, he said the utility would do so in six months.
He said Eskom had secured a further 300 million euros ($386.9 million) from the European Investment bank, but had yet to fully draw on this credit facility.
On the tight global credit market, Nqwababa said Eskom would have to wait a while before plunging in to raise fresh cash.
"We are working on the assumption that the market will be difficult in the next six to 12 months," he said.
Nqwababa downplayed analysts concerns that the cost of Eskom's expansion programme could rise by more than 100 billion rand due to rising cost of equipment to be imported.
"We are not running any forex exposures. On boilers and turbines, we hedged them last year when the euro was 1 to 10 rand. Currency exposure is not one of our significant concerns," Nqwababa said.
(Editing by James Jukwey) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/) ($1=9.814 Rand) ($1=.7754 Euro) Keywords: ESKOM/

(phumza.macanda@thomsonreuters.com; +27 11 775 3152; Reuters Messaging: phumza.macanda.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.