The World Bank has approved a US$ 3.75 billion loan to build one of the world’s largest coal-fired power plants in South Africa.
The loan to South Africa’s power utility, Eskom, includes US$ 3.05 billion for the development of the 4800 MW Medupi plant in the northern Limpopo region. It will provide Africa, for the first time, with the same efficient supercritical technology used in OECD countries.
US$ 485 million of the loan will be used for low-carbon energy efficiency measures, including a new rail line to transport coal, while the remainder (US$ 260 million) will pilot a 100 MW wind power project in Sere and a 100 MW solar power project in Upington.
The World Bank claims that the loan will help South Africa achieve a reliable energy supply, easing the country’s power shortages that lead to regular blackouts throughout 2008.
Obiageli K. Ezekwesili, World Bank vice president for the Africa Region, said: “Without an increased energy supply, South Africans will face hardship for the poor and limited economic growth. Access to energy is essential for fighting poverty and catalysing growth, both in South Africa and the wider sub-region. Our support to Eskom combines much-needed investments to boost generation capacity for growing small and large businesses, creating jobs, and helping lay the foundations for a clean energy future through investments in solar and wind power.”
The World Bank also revealed that the project aims to assist South Africa’s low-carbon future by investing in large-scale renewable energy projects. It also noted the country’s attempts to diversify its energy sources and address climate change.
In a letter to World Bank Group President, Robert B. Zoellick, South African President, Jacob Zuma confirmed that the energy sector is critical to restoring economic growth. He also expressed his appreciation that the Eskom Investment Support Project (EISP) includes “investments in cutting-edge, supercritical technology being installed for the first time on the African continent as well as substantial investments in renewable energy,” and confirmed that his Government is “committed to reducing the country’s carbon footprint and broadening its energy sources in line with our cabinet-endorsed Long-Term Mitigation Scenarios.”
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