Eskom loan approved

2010-04-09 08:58

The World Bank has approved the granting of a $3.75-billion (about R27 billion)

loan to electricity parastatal Eskom.

Late last night, the World Bank said its board of executive

directors had approved the loan “to help South Africa achieve a reliable

electricity supply while also financing some of the biggest solar and wind power

plants in the developing world.”

It added that the loan was the Bank’s first major lending

engagement with South Africa since the fall of apartheid 16 years ago.

“The loan is provided to South Africa’s power utility, Eskom, and

was brought about by unique circumstances including South Africa’s energy crisis

of 2007 and early 2008, and the global financial crisis that exposed the

country’s vulnerability to an energy shock and severe economic consequences,”

the Bank added.

The loan will assist Eskom with its development of a coal-fired

power station at Medupi in northern Limpopo.

While $3 billion of the loan would fund the bulk of the

construction of Medupi, the remainder of the funds would go toward renewable



Over the past weeks, the loan proposal raised objections from

political parties and environmental groups.

However, both government and the power utility stressed that there

was no alternative but to develop Medupi to “keep the lights on.”

The opposition Democratic Alliance (DA) insisted that the Medupi

deal would enrich the ANC by about R1 billion.

This was due to the ruling party’s involvement in the building of

Medupi via its 25 percent stake in Hitachi Africa, the company awarded a boiler

contract for the power station.

Meanwhile environmental groups such as Earthlife Africa JHB argued

that the coal-fired Medupi power station violated World Bank policies and posed

threats of air pollution and high sulphur dioxide levels to communities living


– Sapa

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