World Bank Decides
South Africa Power Loan
The
World Bank is set to approve a controversial three point
seven-five billion dollar loan to support South African state
utility, Eskom as it develops a coal-fired power plant.
World Bank spokesman, Peter Stephens said the World Bank
believed the project was important for South Africa and South
Africans and expects that it will be well received by the board.
The power project has been greeted with objections from the
United States and environmental groups.
Eskom has argued it has no immediate alternative but to develop
the four thousand eight hundred-megawatt Medupi coal-fired plant
in the northern Limpopo region to ease chronic power shortages
in South Africa and ensure power supplies to neighbouring
states.
Financing
While three billion dollars of the loan will fund the bulk of
the coal-fired plant, the remainder of the financing will go
toward renewable and energy efficiency projects.
The United States, arguing that the World Bank should be
promoting clean energy sources, may likely withhold support for
the loan at Thursday’s meeting of the World Bank board, made up
of member countries.
It is unclear whether or not Britain, which has threatened not
to back the loan, will support the project in the end, after a
recent visit to London by South African President Jacob Zuma in
which he lobbied British officials to support the loan.
The opposition to the Eskom loan has raised eyebrows among those
who note that the two advanced economies are allowing
development of coal powered plants in their own countries even
as they raise concerns about those in poorer countries.
Grant conditionality
In a letter to World Bank President, Robert Zoellick on March
26, three senior Democrats, including John Kerry, Barney Frank
and Patrick Leahy, who chair congressional panels, said the
World Bank loan contract should include a commitment by Eskom to
update the Medupi plant with additional environmental protection
as new technology becomes available, and should insist that
Eskom upgrade the environmental standards of its other power
facilities.
The letter further suggested that the projects development and
poverty reduction merits, along with the need to support South
Africa in meeting its energy crisis, led to the submission of
the project to the board for their consideration.
REUTERS/Williams/Yinka
