South Africa’s Eskom Narrows Funding Gap With $1.1 Billion Loan

South Africa’s struggling state power firm Eskom moved a step closer to narrowing a funding gap for the financial year which ends in March by agreeing to a 15 billion rand ($1.1 billion) loan with a local and international bank on Friday.

Eskom is vital to the health of Africa’s most industrialised economy as it supplies more than 90 percent of its power, but it is drowning in around 420 billion rand of debt.

The government-guaranteed loan comes at a time when President Cyril Ramaphosa is trying to turn around Eskom’s finances.

Eskom now only needs to secure around 5 billion rand of funds by the end of March.

“The conclusion of the facility will ensure that Eskom’s liquidity requirements for FY18/19 are timeously fulfilled, which is critical for business operations,” Eskom said in a statement.

Experts hired by Ramaphosa to help revive Eskom have proposed splitting it up to make it more efficient, sources have told Reuters. Analysts expect Ramaphosa to announce his plans for Eskom at a state of the nation address on Feb. 7.

Eskom said on Friday it had already secured 30 percent of its funding needs for the 2019/20 financial year.

($1 = 13.3040 rand)

(Reporting by Alexander Winning; Editing by James Macharia)