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Johannesburg -
Business Unity SA (Busa) on Monday backed the urgent need for a
World Bank loan to Eskom as a part of a larger borrowing programme
by the power utility.
In shaping its views on the appropriate funding of Eskom in the
recent past, Busa had consistently emphasised the need for a new
"mix" of tariff rises, borrowing, and equity financing from
government to ensure future security of electricity supply on an
affordable basis, Busa said in a statement.
Although business welcomed government's commitment to a
sustainable funding model for Eskom, it was important to note that
the latest Eskom tariff hike granted by the National Energy
Regulator of SA (Nersa) was decided without the new funding model
in place.
"The prospect of a World Bank loan therefore comes at an
opportune time as one key component in addressing financial
stability issues at Eskom," it said.
The proposed loan of $3.75bn would further strengthen
Eskom's financial viability following the R20.7bn loan
granted by the African Development Bank (ADB) in November 2009.
"In Busa's view, accessing a World Bank loan is appropriate for
a developing country like South Africa which is both under-borrowed
internationally and anxious to build necessary infrastructural
capacity.
"Failure to borrow sensibly for Eskom's needs will either mean
yet higher electricity tariffs or the risk of load shedding if
Medupi [power station] is not completed in time."
Busa recognised the concerns that had been raised by other
stakeholders in respect of a World Bank loan.
However, Busa believed that such concerns could be addressed in
negotiations with the World Bank to ensure that the loan conditions
were in line with South Africa's national economic interests.
"In the meantime, Busa calls for an urgent dialogue on the
'energy mix' that should be pursued in this country in the decades
ahead.
"The extent to which sources other than coal can be used to
generate electricity, which is essential for a low carbon growth
trajectory, obviously have an impact on the preferred funding model
for Eskom," Busa said.
- Sapa