World Bank to expedite $3.75 bln SAfrica Eskom loan

By Lesley Wroughton WASHINGTON, Dec 2 (Reuters) - The World Bank is to expedite a $3.75 billion loan for South African power utility Eskom and to present it for approval in March 2010, a World Bank official said on Wednesday. The official told Reuters the loan proposal would be presented to the World Bank board in March. The loan, which will be guaranteed by the government, is intended to help the state-owned utility with a critical $51.4 billion power supply expansion to enable it to meet fast-rising demand. If approved, it would be the largest World Bank loan for a project in post-apartheid South Africa. The country's President Jacob Zuma wrote to World Bank head Robert Zoellick last month asking for the financing to be expedited, the official said. According to World Bank documents, the loan would come at a time that access to international credit markets are still constrained by the global financial crisis. The documents show that Eskom is seeking about $16.9 billion in financing, including the $3.75 billion from the World Bank, $2.6 billion from other multilateral institutions and another $1.6 billion through bilateral agreements with other countries and commercial financing. South Africa, the world's top platinum producer and a major gold producer, has been hard hit by power shortages that last year crippled its mines. It has said it will rely on borrowing from capital markets and government loans to fund the expansion. The $3.75 billion project will be financed through the the International Bank for Reconstruction and Development, the World Bank's financing arm for credit-worthy poorer countries and emerging market economies. The bulk oof the loan -- some $3 billion -- will go to developing the Medupi coal-fired power station, a 4,800 megawatt plant. Another $260 million will go toward developing renewable energy sources such as wind and solar power, and $490 million for low-carbon energy components such as road to rail coal transportation and power plant efficiency improvements. The World Bank said the project meets its criteria for supporting coal power projects and is in line with the institution's development and climate change framework. It said the plants will use the cleaner coal "supercritical" and "carbon capture storage ready" designs, the same technologies used in advanced countries. Eskom has already been approved for $2.81 billion in financing by the African Development Bank for the Medupi power project, the first new base-load plant in more than two decades. Medupi is in South Africa's northern Limpopo Province and is expected to be commissioned by February 2012. (Editing by Leslie Adler)