HomeIndustry SectorsFinance and PolicyInitial approval granted for US805 million loan to Eskom

Initial approval granted for US805 million loan to Eskom

underway at Kusile
Washington DC, United States — ESI-AFRICA.COM — 15 April 2011 – The U.S. Export-Import Bank has given initial approval for a US$805 million loan to assist in the development of a high-tech giant coal plant in South Africa “’ a project criticised by environmentalists for the pollution it would emit

The bank granted the approval to South African power utility Eskom to help build the 4,800MW Kusile power plant, which is already under construction in South Africa’s Mpumulanga province.

A final bank vote is expected in about 35 days, following a mandatory Congressional notification period. If approved, the financing will support Eskom’s purchase of engineering and construction management services from Kansas-based Black & Veatch International, a private company.

South Africa is one of nine countries identified by Ex-Im Bank as offering the greatest export sales opportunities to U.S. companies.

The bank said the Kusile plant was designed with advanced technology and equipment, including highly efficient boilers, which emitted far less of the main greenhouse gas carbon dioxide than traditional coal-fired plants. It also pointed out that the project would provide hundreds of jobs to American senior engineers and support personnel during a five-year period.

But environmentalists complained that the plant, which is expected to be completed in five to six years’ time, will bring pollution to surrounding poor communities that will not get electricity from the project. They also said that the plant could release large amounts of carbon dioxide when completed in a country which is to host global climate talks later this year.

“Ex-Im Bank’s decision places US climate change negotiators in a very tough position,” said Friends of the Earth U.S. president Erich Pica. “How can they convince the world they care about climate change this December? This undermines their credibility.”

Eskom undertook an environmental assessment for the project, and the plant would be the first in South Africa to include scrubbers to reduce emissions of sulphur dioxide, the bank said.

The plant is designed to capture carbon dioxide and store it underground permanently. Such technologies are not yet generally available for projects the size of the Kusile plant.