Three US lawmakers have responded to the World Bank’s call for the superpower’s backing of the proposed $3.75 billion loan to South Africa’s state-owned utility Eskom (World Bank Wants US to Provide $$$ to SA). Concerns continue as to Eskom’s funding, and how the utility will allocate the money should it be approved.
Eskom, which uses 90% of coal to generate electricity, plans to continue utilizing coal, but has assured that it would begin incorporating more renewable energy into the mix. If awarded, $3.05 billion of the loan will be used to help fund the Medupi coal-fired power plant that Eskom plans to build in the country’s Limpopo province. The plant will generate power on schedule in 2012 even after technical problems and strikes delayed some of the development, the Public Enterprises Ministry said last month.
However, Representative Barney Frank and Senators John Kerry and Patrick Leahy wrote in their letter to the World Bank President Robert Zoellick that more assurances to the diversification of the energy mix was necessary in order to support the proposed loan.
The loan, scheduled to come to a vote by the bank’s board on April 8, is still seeking backing of its shareholders for the loan. While recognizing the “urgent energy needs” in the region, “we cannot ignore the reality that our planet is hurtling toward potentially catastrophic climate change,” the lawmakers said in the letter, which states the 4,800 MW coal plant will be the world’s fourth-largest. World Bank spokesman Peter Stephens said the project will include “advanced super-critical technology and solar and wind power investments,” and the lawmakers have been kept apprised of what’s expected of Eskom.
South Africa’s Finance Minister Pravin Gordhan said that the country will not adhere to the conditions placed on the World Bank’s $3.75 billion loan to fund the construction of power plants by Eskom (South Africa Disputes World Bank’s Loan Conditions). “South Africa, in 16 years of democracy, never has had to take any loans from the World Bank,” Gordhan told reporters in Johannesburg on April 1. “If it doesn’t come through we will cope. This is an opportunity for the World Bank to build a relationship with South Africa. We are quite optimistic” the loan will be approved on April 8.
However, South Africa has received funding from the World Bank – as recently as November with a $500-million infusion from the World Bank’s Clean Technology Fund to further the country’s CTF Investment Plan set to help generate 4% of its electricity from RE by 2013 and by 12% by 2015. It would not appear that South Africa has the option to voice its unwillingness to compromise regarding stipulations from the very organizations that the country has asked for assistance from in the first place.
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