The World Bank said that it could not comment on how each of its 24 executive directors, who deliberated on the $3,75-billion Eskom loan on Thursday, came to their decision. However, spokesperson Sarwat Hussain did not contradict a National Treasury assertion that the overwhelming majority of the executive directors supported the granting of what was the bank's biggest-ever loan approval, with three abstentions.

"The World Bank is an intergovernmental agency and we don't comment on individual countries' positions on a loan," Hussain told Engineering News Online, stressing that all 185 of the World Bank members had been represented through the executive directors present at the board meeting.

He refused to comment on reports that representatives from the US, the UK and the Netherlands had abstained, owing to climate-change concerns, saying only that the board reached its decision on the basis of consensus building and on an interrogation of whether the loan would help reduce poverty, boost growth and improve livelihoods, while still meeting the bank's environmental hurdles.

No specific conditions had been placed on Eskom with regard to ensuring that the proceeds did not flow to the African National Congress' Chancellor House, through its 25% shareholding in Hitachi Africa. But Hussain pointed out that the award of the R38-billion boiler contracts to Hitachi in 2007 predated the loan and was, thus, not among the specific projects that would benefit from the proceeds.

"The World Bank is not financing the Hitachi component," Hussain reaffirmed.

World Bank vice-president for the Africa region Obiageli Ezekwesili argued that the support to Eskom combined much-needed investments to boost generation capacity with a bid to help lay the foundations for a clean energy future through investments in solar and wind power.

The "Eskom Investment Support Project" would, the bank said, cofinance the following blend of energy technologies:

* $3,05-billion for completing the 4800-MW Medupi coal-fired power station, using, for the first time on the African continent, supercritical technology;
* $260-million for piloting a utility-scale 100-MW wind power project in Sere and a 100-MW concentrated solar power project with storage in Upington; and
* $485-million for low-carbon energy efficiency components, including a railway to transport coal from Emelo to Majuba.

Eskom described the World Bank's decision to cofinance the Medupi power plant in Lephalale, as well as the wind and solar investments, as a "vote of confidence in South Africa and Eskom".

The National Treasury, meanwhile, reported that the loan had been granted on favourable terms, at a rate determined by the six month London Interbank Offered Rate, or LIBOR, plus 0,5% fixed margin and a variable spread of 0,24%, reset semiannually. A maturity of 28,5 years, with a grace period of seven years, had been extended.

Business Unity South Africa (Busa) said that the decision would help to build confidence in the country's security of electricity supply over time and provide a greater degree of predictability to business in its planning.

"This does not mean that South Africa can remain complacent about the electricity situation," deputy CEO Raymond Parsons said, noting that South Africa's reserve margin remained well below the 15% to 19% target level.

Standard & Poor's Eskom analyst Mark Davidson said that, while the World Bank loan would have no immediate effect on Eskom's ratings, "we welcome it from a short-term liquidity perspective".

Frost & Sullivan energy programme manager Cornelis van der Waal said that the immediate benefit of the approval was certainty for Eskom with regard to its planning and construction.

"Although the loan will not ease the anticipated electricity shortages between 2011 and 2013, it will at least ensure that supply be restored after this period," Van der Waal concluded.