South Africa on Friday welcomed a decision by the World Bank to grant Africa’s biggest economy a controversial $3.75 billion loan to develop a coal-fired power plant to boost flagging power supply.
The loan — the first World Bank loan for South Africa since the end of apartheid in 1994 — was approved despite the lack of support from the United States, Netherlands and Britain, which abstained mainly due to environmental concerns.
South Africa, which is battling a chronic power shortage said it would address the concerns raised over emissions. The country is reliant on coal for 95 percent of its electricity supply, and is the worst emitter on the continent.
South Africa’s national grid suffered a near collapse in early 2008, costing the country billions of dollars in lost output across all sectors as Eskom enforced rolling blackouts.
The loan will finance the Medupi power station — Eskom’s first such plant in more than two decades — and the country’s first large wind and concentrated solar power projects.
Medupi is part of several new power stations planned to boost generation capacity to satisfy fast-rising power demand.
“This (loan) will ensure the country’s economic development objectives remain on track and that security of electricity supply is restored,” the Treasury said in a statement.
The loan rate is at 6 month LIBOR + 0.5 percent fixed margin and a variable spread of 0.24 percent, to be reset semi-annually. The maturity is 28.5 years with a grace period of 7 years, the Treasury said.
SOURCED FROM REUTERS