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Zuma supports Eskom loan

Nov 24 2009 08:03 James-Brent Styan

Johannesburg - President Jacob Zuma has become personally involved in Eskom's application to borrow $3.75bn (about R28.125bn) from the World Bank to fund various projects.

This loan could be approved early next year and would help finance, among other things, the construction of a solar-power installation at Upington and a railway line in Mpumalanga.

Zuma has written a letter to the World Bank supporting Eskom's application for the loan. Government has also given guarantees for it.

On Monday National Treasury head Thoraya Pandy told Sake24 that the President had written the letter to emphasise the importance of Eskom's construction programme for South Africa.

The loan would ensure that the two projects previously put on ice could be returned to life. The money would also be used to help finance one of Eskom's new coal-fired power stations, Medupi, near Lephalale in Limpopo.

Pandy said that all conditions precedent to the World Bank granting a loan had been met.

The loan application would be presented to the World Bank's board of directors early next year for final approval. This is where Zuma's letter could carry particular weight.

Eskom said on Monday that the money could be made available as early as in the first half of next year.

A World Bank statement declares that the funds could prevent an energy crisis in southern Africa, and that the money is furthermore regarded as an instalment on a "greener future" for the region.

The bank would not hand the money directly to Eskom. The practice is for the World Bank to allocate funds directly to specific projects. Negotiations to borrow money from the bank are protracted because every project has to be discussed with it, said Eskom.

Eskom has been negotiating with the bank for four years, having initially asked for only $5bn.

The company says the balance of this application ($1.25bn) may be granted in the future.

The three projects for which the bank may make the $3.75bn available, are:

R22.5bn for Medupi;

R1.95bn for renewable energy projects (thermal solar power and wind power); and

R3.675bn for improvements to existing power stations to restrict carbon emissions and develop rail infrastructure to transport the coal to the power stations.

The World Bank is one of the foreign institutions that Eskom approached for funding. The utility also knocked on the doors of the Development Bank of Southern Africa and the European Investment Bank.

- Sake24.com

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

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ILoveSA
Dec 01 2009 09:22 Report this comment

We know he's illiterate so it's apparent that somebody helped Zuma to pen that letter.

Cynic
Nov 26 2009 22:22 Report this comment

Did he also write to Shabir Shaik

@EKSDOM
Nov 26 2009 18:45 Report this comment

obviously the loan will be welcomed by the govt...more money to squander and leave the tax payer to fit the bill...lol

Blegh
Nov 24 2009 15:59 Report this comment

I just hope that Eskom management will not be running those projects, hmm plans 2 months overdue... who cares lets strike in the parking lot... viva. Let multinationals run the projects circumvent the entire Eskom mess of company... Just tired

michael
Nov 24 2009 13:38 Report this comment

Yup, the goverment was warned 12 years ago that the current power supply would not be enough. What did they do? Give more to our neighbours and by submarines and planes that we can't afford to maintain.

BEE
Nov 24 2009 13:34 Report this comment

Zuma is proving me wrong, so far i give him a 9/10 one point missing for not telling Mugabe to f@@@ off. Zuma is on point on the AIDS issue and now on how best to solve the Electricity crisis---GO ZUMA

BrownMuslim
Nov 24 2009 13:33 Report this comment

@Howie GET SOME EDUCATION MY BOY BEFORE U OPEN YOUR MOUTH ! Compare Africa (my Africa too by the way!) to the West and there u have it.... the little bit of brains and development that was brought to Africa was from the Colonial world, so I for one, will never call them 'invaders'. If it wasn't for colonialism, Africa would be DEAD ! Die waarhein maak seer nê? Nou gat change jou nappy !

Prophet
Nov 24 2009 13:28 Report this comment

While everyone was dragging their heels to get the new coal-fired stations on-line, as a last-ditch emergency measure, only to be used in dire emergency a backup-plan was put into place - those diesel-fired gas turbines... The intention was that they should be used like an insurance policy - only when there is no other option.


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