Home | Business | EEC GETS OVER E27M DIVIDEND

EEC GETS OVER E27M DIVIDEND

Font size: Decrease font Enlarge font

MAGUGA – Eswatini Electricity Company (EEC) dividends from the joint venture company Mozambique Transmission Company (MOTRACO) has declined by E12.4 million.


The utility’s dividend, as per the EEC’s annual report for the 2018/19 financial year, amounted to E27 247 500. This was a decline from the dividend of E39 710 400 in the 2017/18 financial year.


Dividends


The dividends received by EEC were benefits of its investment in the 400kilo volt line project with its strategic partners from South Africa and Mozambique. As reported in the past month, the Eswatini Electricity Company (EEC) is now an official shareholder in MOTRACO having successfully cleared a E212.7 Million equity loan with the European Investment Bank (EIB).


“During the year under review, the joint venture company declared a seventh dividend.  The company’s net share of the dividends was E27 247 500 (2018),” reads the report in part.


As per the financing agreement related to the investment, half of the dividend was remitted to the European Investment Bank after deducting 20 per cent withholding tax.


MOTRACO was founded in 1998 as a joint venture between three companies of electricity from Mozambique, South Africa and Eswatini in particular, Electricidade de Moçambique (EDM), Eskom of South Africa and Eswatini Electricity Company (EEC), respectively. 


The aim of this joint venture was to provide efficient energy transmission and services to business and ensure acceptable returns for its shareholders. MOTRACO therefore imports energy for direct sales to Mozal on behalf of EDM, EEC and Eskom through a 400kV line that cuts across the shareholder countries.


It has been more than 20 years already since MOTRACO was established.
This transmission project was conceived at a time when EEC was still battling with several challenges including, but not limited to, frequent power outages at transmission level, transmission constraints and general voltage drops that were being experienced in the power supply system.
According to the joint-venture agreement, the shareholding was split equally between the three investing parties.


Each company then had to contribute one-third of the USD39.5 million (now about E593 million) required equity to acquire its stake in the project. EEC was required to contribute USD10.1 million (almost E151million in today’s exchange rate) towards the acquisition of her 33 per cent stake in the equity of (MOTRACO). However, the company did not have required capital amount at the time and had to borrow to cover the share subscription.


The company then approached the market for funding and on July 15, 1999, a loan agreement with the European Investment Bank (EIB) for 75 per cent of the required capital amount was secured.


Instalment


The loan amount advanced to EEC by EIB for this purpose was EUR 8.2 million (now equivalent to about E133.4 million) repayable, in one instalment, on maturity after 20 years. In addition, to the principal amount advanced, EEC was expected to pay to EIB 50 per cent of its share of the post-acquisition growth of the MOTRACO equity on the maturity of the facility.


The value of this portion was to be determinable from an independent valuation of the MOTRACO equity at the end of the 20 years.
Twenty years later(June 2019), the EIB loan facility matured, the sinking had accumulated adequate resources to extinguish the loan. EEC paid to EIB a total of E212.7 million (EUR12.7 million) in full redemption of both the principal amount and the variable obligation as determinable from the MOTRACO equity valuation report.

Comments (0 posted):

Post your comment comment

Please enter the code you see in the image: