Eskom scores $480mln loan from BRICS Bank for Medupi power plant

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JOHANNESBURG,  April 2 – The New Development Bank (NDB) will provide a project loan of U.S.$480 million (about R6.8 billion) to Eskom for environmental protection project for Medupi Thermal Power Plant, National Treasury said on Tuesday.

Public Enterprises Minister Pravin Gordhan recently said that the Medupi and Kusile coal-fired power plants were “badly designed and badly constructed”.

Both power stations were supposed to add almost 9,600 megawatts to the grid and be fully operational in 2015, and their projected costs have more than doubled to R292.5 billion.

In a statement, Treasury said that this loan from the NDB was in line with the bank’s focus on supporting clean energy in South Africa.

The decisions were taken at the NDB 4th Annual Meeting in Cape Town from Sunday to Tuesday, where three of the five new projects approved for funding by the bank’s board of directors were South African. The five projects bring the NDB’s project portfolio to more than U.S.$9.2 billion.

The three new projects that were approved by the NDB board are for Eskom, the Industrial Development Corporation (IDC), and the Trans-Caledon Tunnel Authority (TCTA).

The three South African projects are separate from the loan agreements that the NDB signed on Monday with Eskom and the Development Bank of Southern Africa (DBSA).

On Monday, the NDB and Eskom signed a U.S.$180 million loan agreement to connect 670MW of renewable energy projects to the national grid.

Under the agreement, the bank will provide a loan with a sovereign guarantee to Eskom for renewable energy integration and transmission augmentation project.

The U.S.$300 million loan agreement signed between the NDB and the DBSA is designed to support greenhouse gas emissions reduction and energy sector development project.

The NDB will also provide a project loan of R3.2 billion, or U.S.$220 million, to Trans-Caledon Tunnel Authority (TCTA) for the implementation of Phase II of Lesotho Highlands Water Project and financing the construction of water transfer infrastructure.

Treasury said that one of the other major outcomes of the annual meeting was an in-principle agreement to expand the membership of the NDB beyond the founding members, which are Brazil, Russia, India, China, and South Africa.

“Negotiations in this regard are ongoing, with an announcement on the way forward expected by the end of the year,” it said. (ANA)