South Africa’s Eskom has received a €150mn credit facility from French development agency Agence Française de Développement (AFD) for the development of power distribution projects in the KwaZulu-Natal, Eastern Cape and Limpopo provinces.

The loan has a tenor of 25 years – including a five-year grace period and 20 years of capital repayment – and will be used for grid strengthening, refurbishment, reliability improvements, minor reticulations, split metering and upstream grid reinforcement to cater for renewable energy.

Eskom has also signed a tripartite financial partnership agreement of €450,000 with Électricité de France (EDF) and AFD, under which AFD will provide the funds in the form of a grant – its first to Eskom – to finance knowledge exchange from EDF on areas ranging from distribution to renewable energy integration.

The two agreements form part of the Eskom borrowing plan 2015/16 to 2019/20.

Eskom’s group chief executive Brian Molefe says: “Both agreements will contribute towards areas of development and the strengthening of our distribution networks in some of the most remote and impoverished parts of our country.”

The company’s chief financial officer Anoj Singh adds: “The loan also enables us to improve Eskom’s diversification of its funding sources given its terms, long tenor and low interest rate, when comparing it to other available sources.”

AFD previously supported Eskom through a €100mn loan for the construction of the 100MW Sere Wind Farm, and a €100mn facility for the construction of a concentrating solar power (CSP) plant.

AFD regional director Martha Stein-Sochas explains: “This programme will greatly contribute to the reduction of the regional inequalities in access to electricity in South Africa, and contribute to the objective of the government towards universal electricity access by 2025. We are also very proud to finance the partnership between Eskom and EDF, in areas where French expertise can help Eskom meet some of the challenges it is facing today.”