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 $3.75 billion. 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).
If Eskom had not secured the loan, it would have been forced to sell an extra $3.5 billion of bonds locally which would have added stress to South Africa’s market.
Meanwhile, the World Bank also granted an additional International Development Association (IDA) credit of $25 million to Tanzania’s Energy Development and Access Expansion Project (TEDAP). The project hopes to create a sustainable basis for energy access expansion and renewable energy development in the East African country. This is after the IDA credit of $105 million and the Global Environment Facility grant of $6.5 million originally approved in December 2007 designed to provide local banks with long-term capital for small renewable energy projects.
“Efficient, economic supply and consumption of electricity will be critical for the future competitiveness and robust growth of the Tanzanian economy,” stated John Murray McIntire, World Bank Country Director for Tanzania, Uganda, and Burundi. “It is our hope that this additional support will enable the provision of lower cost electricity, help alleviate the recurrent power shortages and improve energy security by diversifying electricity generation sources and reducing the dependence on fuel which is susceptible to high price volatility.”
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