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BusinessLive reports that Development Bank of Southern Africa (DBSA) chief investment officer and acting CEO Paul Currie told MPs on Tuesday that the bank had a very high exposure to Eskom and did not plan to make any further loans to the over-indebted power utility.
Currie also stressed that the R3.5bn bridging loan by the bank to South African Airways (SAA) was made only because the airline was in business rescue and the loan was made to facilitate that process. Currie told MPs that the DBSA had granted Eskom a “massive” R15bn loan in 2010 to fill a funding gap for its mega-projects when Eskom was performing well and, to date, the utility had honoured all its interest payment obligations. The loan had been prompted by the threat of market failure as Eskom could not raise the money commercially. The DBSA had also participated with commercial banks a few years ago to provide bridging finance to Eskom. “This is something we do occasionally but typically in exceptional circumstances. It is not something we do regularly,” Currie indicated. He stressed that because of the bank’s large exposure to Eskom, no new loans were envisaged as this would probably exceed prudential limits. “You can never say you will or won’t do something. It will depend on how it is structured. Eskom would certainly not be a target for us to lend to at the moment,” Currie explained.
- Read the full original of the report in the above regard by Linda Ensor at BusinessLive
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