World Bank Inspects $3.75B Eskom Loan

The World Bank has mounted an investigation into its internal procedures related to the approval of a $3.75 billion loan to South Africa’s state-owned utility Eskom.

Despite tensions over stipulations surrounding the World Bank’s loan to supplement South Africa’s state-owned utility Eskom, the bank announced on April 9 that it approved the financing of the Medupi coal-fired power plant. The loan, which will need to be repaid over 28.5 years with a seven-year grace period, is priced at 0.5 percentage points above the six month London Interbank Offered Rate (Libor).

The bank’s probe was offset by residents from the northern Limpopo region protesting that the project posed health and environmental hazards. "The Inspection Panel is beginning its investigation, and World Bank staff cannot comment on the specifics of ongoing investigations," a World Bank spokesman told Reuters, adding that the panel is an independent body that "works to address concerns of people who may be affected by Bank projects.”

Eskom said it was aware of the investigation, but declined to comment further as the probe was relating to alleged policy violations by the World Bank, not Eskom. Eskom has defended the Medupi plant, saying there is no immediate alternative to ease the country’s chronic power shortages and ensure power supplies to neighboring states.

"The investigation probably won’t stop the building of Medupi, but it may make the power plant a lot more environmentally friendly," said Tristen Taylor, an energy policy officer for Earthlife.

Get the LATEST issue of Alternative Energy Africa featuring biofuels in the aviation industry, the Northwest Bend, and much more. Subscribe today to stay in-the-know.