UPDATE 3-Eskom signs $500 mln loan with AfDB for expansions

* Signs $500 mln 20-year loan with AfDB

* Loan to be used for Eskom's power expansion programme

* No commitment from World Bank yet

(Adds details)

By Phumza Macanda

JOHANNESBURG, Nov 10 (Reuters) - South Africa's state-owned utility Eskom [ESCJ.UL] 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.