World Bank decides on Eskom loan today

Thursday, April 8, 2010

Pretoria-With the World Bank expected to announce its decision on South Africa's application for a $3.75 billion loan today, government says that all stakeholders in the matter have been engaged.

"The Government of South Africa and Eskom have sought to consult and engage with stakeholders, domestically and internationally, on Eskom's loan application to the World Bank," said government in a statement.

The power utility approached the Bank for funds to build the coal fired Medupi power station in Limpopo. The power station will help increase the country's generation capacity.

However, the loan has come under scrutiny from environmental groups who want clarity on the measures that will be put in place to offset the CO2 emissions from the Medupi plant.

"South Africa's plan for reduction in CO2 emissions is not based on an offset structure, but rather focuses on achieving country emission reductions which are consistent with the Long Term Mitigation Scenarios (LTMS)," said Government.

"The initiatives by government should not be read with offsets in mind but rather be seen as country-planning that has the potential to alter the pace and path of emissions and in moving towards sustainable development, whilst ensuring stability of the region in general," it explained.

Government said work to address market or policy barriers delaying energy efficiency and renewable programmes as well as future actions needed to achieve mitigation objectives was already underway with the Bank.

By using the Clean Technology Fund, government will look at wind energy, solar water heaters and energy efficiency.

Government also said Eskom will upgrade its environmental technology at its other plants and that with assistance from the World Bank money set aside, will be considered as part of the ongoing work in reducing emissions.

In addition to the requested funds if approved, the World Bank will make an additional $ 1.25 billion available to Eskom for use in emission reduction measures.

Government also added that it will explore the acceleration of the de-commissioning of older plants if warranted.

"This will further contribute toward reaching our emission reduction targets," it said adding that the decommissioning is something that can only be done in the medium term given the current energy requirements.

The bank's decision will be made known following a meeting today.