The World Bank has approved a $3.75 billion loan to the South African utility firm Eskom, which will mostly go towards the development of its Medupi coal-fired power plant.
The bank has said the loan will help South Africa to escape crippling power shortages by supplying businesses and homes with much-needed electricity. Power shortages in 2008 led to blackouts across the country.
Improved supply will also enable South Africa to export electricity to neighbouring countries.
The bank said the 4,800 megawatt coal-powered Medupi plant will use for the first time in Africa the same proven technology that major industrialized nations employ in similar plants.
The bank also said that access to electricity was vital for fighting poverty and improving economic growth, both in South Africa and neighbouring regions.
The majority of the loanÔÇö$3.05 billionÔÇöwill go towards completing the Medupi power plant, which is situated in the northern part of the country. However, wind and solar power projects were also allocated a sumÔÇö$475 millionÔÇöfrom the loan.
Ruth Kagia, World Bank Country director for South Africa, said: ÔÇ£The Eskom project offers a unique opportunity for the World Bank Group to strengthen its partnership with the Government of South Africa, Eskom, and other financiers and help South Africa chart a path toward meeting its commitment on climate change while meeting peopleÔÇÖs urgent energy needs.ÔÇØ
Out of the funding, $260 million will go towards piloting a utility-scale 100 megawatt wind power project in Sere and a 100 megawatt concentrated solar power project with storage in Upington. Meanwhile, $485 million has been allocated to low-carbon energy efficiency components, including a railway to transport coal with fewer greenhouse gas emissions.
Obiageli K. Ezekwesili, the World BankÔÇÖs vice president for the Africa Region, said: ÔÇ£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.ÔÇØ
Vijay Iyer, World Bank Energy Sector manager for Africa, added: ÔÇ£As part of the project, Eskom will pilot 100 megawatts of solar power with storage and wind power, the biggest grid-connected renewable energy venture in any developing country. We are optimistic that the lessons learned from these projects will facilitate the scale-up of the renewable energy industry across Africa.ÔÇØ
South Africa has succeeded in increasing energy access from around 30 per cent of citizens to more than 80 per cent since the fall of apartheid in 1994. Its Free Basic Electricity policy provides 50 kilowatt hours of free electricity per month to poor families.
South Africa generates 60 per cent of all electricity consumed on the African continent. The World Bank said a functioning electricity sector in the country was crucial for job creation, economic progress, human welfare and poverty reduction.
