Eskom loan a 'vote of confidence'

Cape Town - Eskom has welcomed the World Bank's approval of a $3.75bn loan to co-finance the Medupi power plant in Lephalale, Limpopo, and Eskom's proposed concentrated solar project and wind energy projects.

"This loan is a vote of confidence in South Africa and Eskom.

"On behalf of the board of directors, I welcome this commitment to South Africa and to the region's future development," Eskom's acting chairperson Mpho Makwana said.

"Eskom is thankful to all the role players for making this loan possible.

"We look forward to the mutually beneficial relationship that will result from this support," he said.

The World Bank loan significantly contributed to the provision of baseload power.

Improved energy security would advance South Africa's development agenda for economic growth and human upliftment.

Eskom finance director Paul O'Flaherty said the loan was part of a multi-year investment programme that provided the foundation for the necessary electricity expansion in South Africa.

"In line with our existing multilateral funding, these funds combine favourable financing rates with a structured repayment profile, thereby making it an economically attractive option to contribute to South Africa's future economic growth.

"This approval clears the way for the full construction of Medupi power station and is catalytic for South Africa's commitment to renewable energy and lower carbon technologies, such as large-scale solar thermal and wind power.

"The funding is well aligned to jump start progress on South Africa's commitment to a lower carbon footprint," O'Flaherty said.

Completing Medupi was a matter of urgent national interest, as energy demands had grown considerably in the past 15 years and were projected to grow further as the economy expanded.

Construction was progressing well and the first Medupi unit was expected to come on line in 2012.

Medupi would be the largest dry-cooled power plant in the world, and Africa's first plant using "supercritical" technology.

It would provide 4 800 MW of power - an addition of more than 10% to South Africa's existing baseload.

The National Union of Mineworkers (Num) also welcomed the loan.

"We welcome the decision by the World Bank to give Eskom the loan which, we believe will go a long way in alleviating the current energy problems in the long term," Num general secretary Frans Baleni said.

"We, however, call on both the state and Eskom to divulge the conditions attached to this loan as we know quite often these kinds of loans come with stringent conditions," he said.

"We can only hope that the conditions attached to this loan do not open up our energy sector to global competitors who will roll back our desire to electrify all households in South Africa, and that they will not impact negatively on empowerment policies."

- Sapa