World Business

Giant SA power plant gets WB nod

By Sandrine Rastello (China Daily)
Updated: 2010-04-10 10:40

WASHINGTON - Eskom Holdings Ltd, South Africa's State-owned electricity supplier, received approval for a $3.75 billion loan from the World Bank (WB) to help build one of the world's largest coal-fired power plants.

The deal is the institution's first major loan to South Africa since apartheid ended in 1994, the bank said. The United States, the bank's biggest shareholder, and the United Kingdom were among nations that abstained from voting.

"Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth," said Obiageli Ezekwesili, the World Bank's vice-president for Africa, in the statement.

South Africa, the world's biggest producer of platinum, is suffering from a power shortage that forced shutdowns at mines and factories in early 2008.

Eskom, which provides power to 95 percent of the country, sought financial aid to help fund an expansion aimed at preventing blackouts from reoccurring.

The US withheld support for the project on environmental grounds, the Treasury Department said.

Johannesburg-based Eskom, which said on March 2 it will be unable to meet South African power demand starting next year, sought the loan to help close a funding gap for a 460 billion-rand ($63.3 billion), five-year expansion plan. The 4,800 megawatt Medupi facility is "critical" to addressing the country's power deficit, Public Enterprises Minister Barbara Hogan said last month.

Of the total, $3.05 billion will help complete the Medupi plant, $260 million will be used for wind and solar power projects and $485 million will go for low carbon-emitting development, including a railway to transport coal, the bank said.

Bloomberg News