Friday, March 4, 2011

French sign investment agreements with Acsa, Eskom, City of Johannesburg

Two financing agreements intended to support growth, create jobs, alleviate poverty and promote sustainable development were signed during President Jacob Zuma's state visit to France this week.

The agreements were signed by the Agence Française de Développement (AFD) and two major South African partners -- Airports Company SA (Acsa) and Trans-Caledon Tunnel Authority (TCTA), AFD said in a statement on Friday.

"These are emblematic of the France-South Africa Partnership: over the last 15 years the two nations have built a close co-operation to support growth, create jobs, alleviate poverty and promote sustainable development in Southern Africa," it said.

AFD had a mandate to support South Africa's economic growth by funding large infrastructure programs, such as bulk water projects and airports.

Other projects would soon be financed with Eskom (renewable energy) and the City of Johannesburg (water).

Acsa and AFD signed a 15-year loan (including a five-year grace period) of EU200 million for refinancing short-term indebtedness incurred to upgrade Cape Town International Airport, which was Africa's 3rd largest.

To achieve the required extensions and upgrades of its airports, Acsa had developed an investment plan of R17 billion over the period 2008-2012.

During the international financial crisis, South Africa's financial market had limited availability of long-term funding in favour of short-term financing that was not well suited to investments to be carried out by Acsa.

The AFD loan would help Acsa implement its funding strategies in 2010/2011, which provided for optimising its balance sheet to match investments with longer maturity financing.

A memorandum of understanding had also been signed between TCTA and AFD for financing the Spring Grove Dam and appurtenant works on the Mooi River.

The project was intended to supplement the yield of the Mgeni system, one of the three supplying water to more than five million people in KwaZulu-Natal.

The project comprised a dam to be constructed on the Mooi River in the KwaZulu-Natal Midlands, and a conveyance system to transfer water to the Mgeni River catchment.

Once constructed, it would provide an additional 60 million m3 a year, address water delivery backlogs, and improve the security of supply.

The total cost of the project was EU225 million (about R2.1 billion).

The project would be co-financed by AFD together with its European partners KfW and the European Investment Bank, "thus illustrating the coordination between the European Union and its member states with South Africa", AFD said.