CAPE TOWN, Nov. 27 (Xinhua) -- The African Development Bank Group (AfDB) and South Africa's power utility Eskom on Tuesday signed a loan agreement worth 2.886 billion rand (about 209 million U.S. dollars) to improve power transmission in Southern Africa.

The loan will be used for the construction of 552 kilometres of transmission lines and associated substations across Mpumalanga and Kwa-Zulu Natal provinces, the upgrade of substation equipment including earthing systems at various existing substations in Mpumalanga, Eskom said.

It's anticipated that this will translate to integration of distributed generation of mainly large-scale renewable energy, into the transmission network, ensure reliability and security of supply, reduction of transmission losses, improved regional integration and safety of operations and maintenance personnel, according to Eskom.

The financing of the Eskom Transmission Project will result in a significant strengthening of South Africa's transmission infrastructure, said Kapil Kapoor, Director General of AfDB's Southern Africa Bureau.

"Not only will this improve the reliability and security of electricity supply, but will also allow for the integration of large-scale renewable energy into the transmission network, enhance network capacity for future load growth and ensure reduction in transmission losses," Kapoor said.

Eskom, South Africa's major power provider, also contributes about three quarters of the total installed power generation capacity in the Southern African Power Pool, exporting power to at least six countries in the region.

Eskom and AfDB have enjoyed a productive partnership since 2009 when the bank approved the first facility in support of the utility's capital expansion program. This project has contributed to the realization of the New Deal on Energy in Southern Africa, one of the bank's priority development areas, by ensuring capacity to add new connections in South Africa and the region.

"We are encouraged by the level of support that we continue to receive from Developing Finance Institutions, such as the African Development Bank which continues to be a significant partner and a key contributor to the progress achieved by Eskom in the execution of the current capital expansion program," said Calib Cassim, Eskom's Acting Chief Financial Officer.

The loan comes at a time when Eskom has made major advancements towards fully securing the 72 billion rand funding requirement for this year, according to Cassim.

These kinds of facilities are a demonstration of the bank's mandate to contribute to the economic development and social progress of African countries, he said. Enditem

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