Friday, April 9, 2010

S.Africa govt welcomes World Bank loan to Eskom

JOHANNESBURG (Reuters) - South Africa's government on Friday welcomed a decision by the World Bank to grant Africa's biggest economy a controversial $3.75 billion loan to develop a coal-fired power plant to boost flagging power supply.

The loan -- the first World Bank loan approved for South Africa since the end of apartheid in 1994 -- was approved despite the lack of support from the United States, Netherlands and Britain, which abstained mainly due to environmental concerns.

"This will ensure that the country's economic development objectives remain on track and that security of electricity supply is restored," a statement from the Treasury said.

"Investment in energy remains a cornerstone of government's economic strategy."

The loan rate is at 6 month LIBOR + 0.5 percent fixed margin and a variable spread of 0.24 percent, to be reset semiannually. The maturity is 28.5 years with a grace period of 7 years.

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