May 2, 2019 / 4:03 PM / 21 days ago

UPDATE 1-South Africa says Chinese loan to Eskom not in jeopardy

(Adds detail, context)

JOHANNESBURG, May 2 (Reuters) - South Africa’s public enterprises ministry on Thursday said that a China Development Bank (CDB) loan to struggling state power company Eskom was not in jeopardy.

Eskom had expected to draw down 7 billion rand ($481 million) from a $2.5 billion CDB loan facility by late March, but South Africa’s finance ministry said in a report to parliament last month that the drawdown had been delayed.

The delay meant South Africa had to bring forward a planned bailout for Eskom, which supplies more than 90 percent of the electricity in Africa’s most industrialised economy but has been grappling with a severe financial crisis.

The South African government and Eskom are working to ensure the transfer of funds from CDB to Eskom, the public enterprises ministry said in a statement.

“It must be emphasised, for the sake of clarity, that this, or any other loan, is in no way connected to the issue of equity in any of our state-owned enterprises,” the statement said.

The Chinese loan to Eskom was agreed in July last year, during a visit to South Africa by Chinese President Xi Jinping.

Eskom is battling with liquidity problems. The government has promised the utility a bailout of 23 billion rand a year over the next three years, but energy experts say it will need more support. ($1 = 14.5500 rand)

Reporting by Alexander Winning Editing by David Goodman

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