Johannesburg – With the controversial $3.75bn World Bank loan for Eskom in the bag, government now needs to focus on proactively developing a sustainable energy policy to ensure sustained economic growth in South Africa, said consultancy group Frost & Sullivan.
The World Bank approved the controversial loan last week despite the decision by Britain, the US, the Netherlands, Norway and Italy to abstain from voting.
Environmental activists and political opponents took a stand against the loan, which will help finance Eskom’s coal-fired power station Medupi near Lephalale in Limpopo province.
The ANC has a 25% stake in Hitachi Power Africa, which has contracts worth R38bn to supply boilers for Medupi and the second power station, Kusile. It now appears that the ANC is considering selling its stake, but critics say it will still profit considerably from such a transaction.
Environmental activists are hot under the collar about the World Bank’s decision to finance a coal-fired power station while climate change is an escalating problem. Coal releases more carbon dioxide per unit of energy than any other fossil fuel. Medupi is expected to produce up to 30 million tonnes of carbon dioxide a year, Bloomberg reported.
There are also fears that coal mines in the environment of Medupi will pollute rivers, with illegal mining activities already taking place in this area.
Cornelis van der Waal, manager of the Frost & Sullivan energy programme, said although the loan will not relieve the anticipated electricity shortages between 2011 and 2013, it will increase the country’s base energy supply and help to ensure sufficient capacity to provide for South Africa’s energy needs after 2013.
It is crucial Medupi is completed as quickly as possible owing to a combination of pressures. These include the lack of investment in new base power stations since the 1980s and outdated infrastructure, said Van der Waal.
About R22bn will be spent on Medupi, which will have a capacity of 4 800MW. Another R5.5m will go towards increasing energy efficiency through investments in solar (100MW) and wind energy (100MW) projects.
These entail the largest sun and wind energy projects in the developing world.
The South African National Energy Association has lauded the granting of the loan. Chairperson Brian Statham said this is an essential part of planning to return South Africa to a position of security of energy supply, which is imperative for social and economic development.