Funding dogs Eassy

By Paul Vecchiatto, ITWeb Cape Town correspondent

Cape Town, 16 Aug 2007

The East African Submarine Cable System Consortium (Eassy) is to announce details of its funding later this month to begin construction of its cable, says Ambrose Obutu of the Eassy secretariat.

Eassy is a commercial venture made up of a number of African and international telecommunications companies. It is falling behind its potential rival Seacom in laying its own 10 000km cable that is aimed at connecting the east African coast to the rest of the world.

An estimated $230 million is needed for the construction of the Eassy cable and the project was first mooted in 2002. However, a combination of political interference and scuffles within the consortium caused a delay. Eassy was originally due to be operational in 2005, but it is now aiming for 2009.

Earlier this month, the International Finance Corporation (IFC), the private investment arm of the World Bank, said it had earmarked $32.5 million for the project.

An IFC spokesman says the financing consists of an $18.2 million senior loan and a $14.5 million standby loan.

The IFC does not disclose the interest rates on loans, but generally it aims for a return of the London Inter-Bank Offer Rate (an international lending benchmark), plus six percentage points.

Not yet finalised

According to the IFC spokesman, Eassy has not yet raised the full amount needed to begin construction of its cable.

"The remainder of the money will come from the private operators and, while Eassy has not raised the full amount, it will do so," he says.

SA's Department of Communications is championing the Nepad ICT Broadband Infrastructure Network, which is established under the auspices of the African Union's e-Africa Commission. The department has declared that privately-owned cables will not bring down broadband costs.

Communications director-general Lyndall Shope-Mafole has said the Nepad project is considering laying its own cable.

Seacom has already started surveying the route of its own cable and expects to start construction in September.

While the actual breakdown of the Eassy consortium has not been released yet, it is known that SA's Telkom owns 11%, and BT has a stake of about 5%. National signal distributor Sentech was supposed to take a 10% stake, but has since had to pull out due to lack of funding.