Cape Town - If the World Bank loan of almost $4bn is not granted to Eskom, this would constitute one of the biggest tragedies South Africa has ever experienced.
It would destroy the economy, plunge the country into regular blackouts and consumers would have to pay even more until 2013 to complete the construction of the cornerstone of the country's electricity supply, the new Medupi power station in Limpopo.
This is according to Public Enterprises Minister Barbara Hogan as well as Energy Minister Dipuo Peters.
The ministers called an urgent press conference following media reports describing opposition to the loan from US environmental pressure groups which consider it should not be used for the construction of coal-fired power stations.
Hogan said that government was convinced it would - or was absolutely determined to - get the loan.
The World Bank is expected to decide around April 8.
Britain also initially slammed the possible awarding of the loan, but its opposition is apparently not currently significant.
The US is expected to abstain from voting and has promised not to vote against the loan.
France has indicated that it will support the credit line. Hogan said the World Bank supports it. Everyone realises how important South Africa is to the rest of Africa.
The American diplomatic service in South Africa reports that the US Treasury is examining the Eskom loan proposal. The arguments of civil groups in South Africa and Washington, as well as those of the South African government, are under consideration.
Hogan said government is concerned about misconceptions around its energy policy, and has repeatedly emphasised government's commitment to clean energy.
The loan comprises the following: $3.05bn for Medupi, Africa's first clean 4 800MW coal-fired power station, about $260m for investment in renewable energy (100MW of wind power and 100MW of solar power) and $485m to invest in low-carbon solutions for transporting coal (a shift from road to rail transport).
Hogan believes it will be a significant step in the application of the long-term mitigation scenarios (LTMS) plan to combat climate change.
She emphasised that the loan was for a specific investment project, and not a development loan containing macroeconomic prescriptions by the World Bank.
In terms of South Africa's commitment at the United Nations' climate negotiations in Copenhagen, South Africa is to cut its greenhouse gas emissions 34% by 2020, and 42% by 2024, coming from a business-as-usual scenario.
Hogan said that according to the LTMS plan, an emission peak is expected by 2020. Thereafter it ought to stabilise, and to decline from 2035. The LTMS plan includes the new power stations, Medupi and Kusile, which have been designed to be more energy-efficient.
The second version of South Africa's power plan should be completed in June, and this accentuates the energy mix including nuclear power and renewable energy that South Africa must have after 2013, said Peters.
The existing resource plan focuses more on the establishment of a massive and adequate base-load electricity system by 2013.
- Sake24