Fin24

Eskom plant gets US nod

2011-04-15 07:59

Washington-  The US Export-Import Bank on Thursday gave initial approval for an $805m loan to help develop a high-tech giant coal plant in South Africa, a project criticised by environmentalists for pollution it would emit.

The bank granted the approval to Eskom to help build the 4 800 megawatt Kusile power plant, which is already under construction in Mpumulanga.

A final bank vote is expected in about 35 days, following a mandatory Congressional notification period.

If approved, the financing will support Eskom's purchase of engineering and construction management services from Kansas-based Black & Veatch International, a private company.

South Africa is one of nine countries identified by Ex-Im Bank as offering the greatest export sales opportunities to US companies.

The bank says the Kusile plant is designed with advanced technology and equipment, including highly efficient boilers which emit far less of the main greenhouse gas carbon dioxide than traditional coal-fired plants.

It also said the project would provide hundreds of jobs to American senior engineers and support personnel during a five-year period.

But environmentalists complained the plant, which is expected to be completed in about five or six years, will bring pollution to surrounding poor communities that will not get electricity from the project.

They also said the plant could release large amounts of carbon dioxide when completed in a country that will host global climate talks later this year.

"Ex-Im Bank's decision places US climate change negotiators in a very tough position," said Erich Pica, the president of Friends of the Earth US.

"How can they convince the world they care about climate change this December? This undermines their credibility."

Eskom undertook an environmental assessment for the project, and the plant would be the first in South Africa to include scrubbers to reduce emissions of sulfur dioxide, the bank said.

The plant is designed to capture carbon dioxide and store it underground permanently. But such technologies are not yet commercially available for projects the size of the Kusile plant.