DJ UPDATE: African Development Bank OKs EUR1.86 Bln Eskom Loan
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The African Development Bank has approved a loan of EUR1.86 billion to Eskom Holdings Ltd. to finance the construction of a new coal-fired power plant to help meet rising demand for electricity in South Africa and the region.
The Medupi plant in the country's northern Limpopo province is expected to be commissioned by February 2012 and the Tunisia-based lender said it will cost about EUR11.19 billion, which will be financed with 53% equity and 47% by loans. The World Bank and export credit lenders will act as co-lenders with AfDB.
"South Africa's energy problem has been a major impediment to Africa's leading economy," said AfDB President President Donald Kaberuka. "This operation should be seen in the context of the bank's ongoing efforts to help Africa bridge the infrastructure gap."
State-owned Eskom, which generates and distributes roughly 95% of South Africa's electricity, has plans to spend 385 billion rand ($51.65 billion) over five years expanding its generating capacity. The country was hit by a spate of blackouts in late 2007 that culminated in a near collapse of the national grid early last year which forced most mines in South Africa to suspend operations for five days.
Eskom received a license to build Medupi, the first new coal-fired power station in more than 20 years, in 2006 and turned sod on the site in August 2007.
AfDB said Eskom also is working on a number of renewable energy program, including a pilot wind farm in the Western Cape, a 100 megawatt solar power plant and a 100 MW wind farm feasibility study. The utility has said it plans to deliver an additional 16,304 MW in power station capacity by 2017 and ultimately double its capacity to 80,000 MW by 2026.
-By Robb M. Stewart, Dow Jones Newswires; +27 11 783 7848; robb.stewart@dowjones.com
(END) Dow Jones Newswires
11-26-09 0943ET
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