Ex-Im Bank to support Transnet, Eskom purchases from US firms
The head of US federal government's Export-Import Bank (Ex-Im) has confirmed that the organisation is keen to support the financing of infrastructure projects in South Africa and that the country has been identified as one of nine globally where it aims to increase deal flow in the coming years.
Overall during the previous fiscal year, the bank, which is the official export credit agency of the US and assists in financing the export of American goods and services to international markets, authorised a record $24,5-billion in loans, guarantees and insurance.
During a trade mission to South Africa this week, chairperson and president Fred Hochberg confirmed that the initial South African-linked transactions were likely to involved State-owned enterprises, Transnet and Eskom.
He announced that steps had been taken to approve financing for the US export of locomotives to Transnet.
The transport utility is currently buying 100 diesel-electric locomotives from GE South African Technologies in a contract worth about R2,4-billion. But the freight logistics has also indicated that it could purchase between 75 and 100 locomotives a year over "a prolonged period" to reduce the average age of its locomotive fleet from 30 years to below 20 years.
Hochberg confirmed Ex-Im's first-stage approval of financing for the export of General Electric locomotives to Transnet, pending Congressional notification of the bank's intent to approve the transaction.
He also confirmed that an initial review of Eskom's R142-billion Kusile coal-fired power plant had opened the way for a possible transaction to finance the sale of engineering services being supplied by a US firm to the utility.
The review of the power plant was pursued under Ex-Im's "enhanced due diligence process for high carbon intensity facilities", and its board had subsequently decided to proceed with a full financial, technical and environmental review of the project.
Following that review, the transaction to finance the sale of services to Eskom by Black & Veatch, of Kansas, will return to the board for "final action".
In the private milieu, Ex-Im recently gave final approval for $7-million in financing to support the sale of five new Caterpillar off-highway trucks and one new tractor to Eqstra Holdings, a JSE-listed capital equipment group.
"South Africa is a dynamic economy with a growing appetite for infrastructure development," Hochberg said, adding that US companies and competitive Ex-Im financing would be available to support the infrastructure roll-out and other purchases by small and medium-sized businesses.
Hochberg also signed a memorandum of understanding with South Africa's Export Credit Insurance Corporation (ECIC), under which the two agencies would exchange information on trade and business prospects in order to identify opportunities for cooperation, including cofinancing opportunities in sub-Saharan Africa.
During his visit, Hochberg met with a wide range of private and public sector leaders, including representatives of South Africa's Department of Public Enterprises, commercial banks, as well as Eqstra, Transnet and Comair.
Posted by Darey
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