On March 29, 2016, MIGA issued a guarantee of €698.92 million ($783.2 million equivalent) covering loans by Deutsche Bank AG (and subsequently replaced by Deutsche Bank Luxembourg S.A.) and Mizuho Bank Ltd in support of the international funding program for Eskom Holdings SOC Limited (Eskom). The guarantee covers the risk of non-honoring of sovereign financial obligations for a period of up to 15 years.
The financing will support transmission and information technology-related projects related to the expansion and upgrading of South Africa’s electricity infrastructure to meet its growing needs.
Given Eskom’s importance as the dominant utility in South Africa generating 95 percent of the country’s electricity and 45 percent of all the electricity requirements for the African continent, the main development impact of the proposed project is an increased and more reliable power supply for the country and region.
In addition, the capital expansion program will provide direct benefits through local sourcing, job creation, and skills development.
The project is aligned with the World Bank Group’s support to Eskom, which includes lending, technical assistance, and advisory services. It is also consistent with MIGA’s commitment to supporting investments into middle-income countries.