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 (AfDB) 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 from A1 to Baa2 by rating agency Moody's in August this year.
"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 a 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."
Even though the AfDB had made the loan available for Eskom to draw from immediately, the utility said it would do so in six months and would start paying it off five years from the last withdrawal.

The interest rates and the funding structure were much more "competitive" compared to a foreign institution, Eskom's Chief Financial Officer Bongani Nqwababa told reporters.
He 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 said.
Nqwababa 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.

Nqwababa said Eskom would have to wait a while before trying to raise cash internationally.
"We are working on the assumption that the market will be difficult in the next six to 12 months," he said.
He 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, most of which has 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.
He said Eskom was well-placed to attract investors when the global financial crisis was over.
"When the dust settles, investors are likely to target investment like ours where there is a real cash flow because we are a utility. We are also not here today, gone tomorrow like the fancy financial products."
Eskom's spokesman Fannie Zulu said the utility was still in talks with the World Bank but there was no commitment yet.
"The Bank made a statement. It is an indication on their part of the appetite to fund us, it is not a commitment but they have appetite to fund the infrastructure programme," he told reporters.
(Editing by James Macharia and Rupert Winchester) (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)

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