World Bank defends Eskom loan

Johannesburg - Poverty could not be reduced without the availability of electricity, the World Bank said on Thursday.

This followed criticism from some quarters of the granting by the World Bank of a $3.75bn loan to electricity parastatal Eskom, mainly for the construction of its coal-fired Medupi power station.

"The Eskom project seeks to support South Africa's efforts to achieve energy security, and implement a suite of renewable energy projects, some for the first time on the African continent," the World Bank said in a statement.

"We believe that there can be no poverty reduction without power, and sustainable development cannot be achieved without addressing climate change... the Eskom project is helping to get this balance right," the bank said.

It said the South African government considered the project to be of strategic national importance, "and we are pleased to support a pro-growth and pro-poor project".

Earlier this week social movement Jubilee South Africa alleged that the granting of the loan to Eskom would bestow economic and environmental problems on South Africa.

"The large size of the loan, as well as the signal that the granting of the loan sends to other lenders to make further loans, will have serious economic repercussions," Jubilee said in a statement.

The loan was based on an intensification of coal-fired power, it added.

"This requires the expansion of coal mining, entailing the further dispossession of people from their land."

Jubilee said coal-fired power stations needed highly purified water, but mining polluted water, so people's water needs would also be sacrificed.

- Sapa