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World Bank to cut ANC out of loan

Apr 07 2010 09:20 James-Brent Styan

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Johannesburg - The World Bank loan for which Eskom is applying will not be used for any project in which Hitachi SA is involved.

The ANC's investment arm, Chancellor House, is a shareholder in Hitachi SA, one of the biggest contractors for the new Medupi power station being built by Eskom.

The World Bank has been sharply criticised for its plan to lend Eskom money because this could indirectly benefit the ANC.

On Thursday the World Bank is to decide on Eskom's application for a $3.75bn (about R28bn) loan.

Sarwat Hussain, senior spokesperson for the World Bank in Africa, told Sake24 on Tuesday that no portion of the requested loan would be awarded to any contract in which Hitachi was involved.

There are hundreds of projects and contracts involved in constructing a power station as large as Medupi, and the contemplated loan will be used to finance projects unrelated to Hitachi.

About R22.5bn is targeted for construction of the Medupi power station in Limpopo.

The loan has also been under fire from environmental activists putting particular pressure on the British and the American governments not to approve the loan as part of the money will be used for a coal-fired power station that could damage the environment.

Hussain says the World Bank's response to this criticism is simple: up to R5.5bn of the loan is directed at promoting renewable power projects in South Africa. This includes a 100MW solar power project.

The bank believes the loan will be a catalyst for renewable energy projects in South Africa and Africa.

The Medupi power station will also use some of the latest technology to limit, as far as possible, the environmental impact of burning coal.

That's one of the reasons for the high cost of the project. It's the bank's practice not to hand money directly to companies, but to allocate it directly to projects instead.

But Democratic Alliance leader Helen Zille says the DA will not rest easy until the ANC has been removed as a Hitachi Africa shareholder.

These types of transactions have many complex layers, she said, with primary contracts and sub-contracts, and it is all too easy to mask corruption and the involvement of certain parties.

The World Bank could not allow itself to be party to a transaction from which a political party benefited in any way, she insisted.

On Tuesday evening Zille was to have met bank representatives to explain her party's views.

The South African business sector has meanwhile stepped up to the plate to support the loan. D

Deputy chief executive of Business Unity South Africa, Raymond Parsons, says the loan's approval is essential for electricity security in South Africa.

It would be a huge blow for the country if Eskom were not granted the loan, he said.

- Sake24.com

For business news in Afrikaans, go to Sake24.com.

 
 
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