World Bank president defends plans for loan to South Africa

By Howard Schneider
Washington Post Foreign Service
Wednesday, April 7, 2010

World Bank President Robert B. Zoellick this week defended plans to lend South Africa $3 billion to build a coal-fired power plant, rebuffing arguments that the bank should only fund clean-energy projects and avoid technologies that contribute to climate change.

In a letter to a group of U.S. lawmakers who have challenged the proposed loan to South Africa's Eskom electric utility, Zoellick said it would be hard to deny help to a developing country as it emerges from a crisis "sparked by conditions in the United States and the developed world."

"Coal is still the least-cost, most viable, and technically feasible option for meeting the base load power needs required by Africa's largest economy," Zoellick said, noting that the 4,800 megawatt plant would use efficient "supercritical" technology, enable electricity sales to neighboring countries and help avoid the power shortages that plagued South Africa in 2008.

The project, due to be voted on by the World Bank board on Thursday, has become a rallying point for environmental groups and others who say the bank should not fund fossil-fuel plants.

In late March, Sen. Patrick J. Leahy (D-Vt.), Sen. John F. Kerry (D-Mass.), and Rep. Barney Frank (D-Mass.) wrote to Zoellick that they had "serious questions" about the project and that it could shape debate about the bank's request for additional capital from the United States.

The project has been controversial within South Africa as well, drawing opposition from some labor groups and others.

But in responding to the lawmakers, Zoellick said the bank was balancing the development benefits of projects such as the Eskom plant with other environmental objectives. South Africa, he said, has well-developed plans to address climate change but no alternative for quickly boosting its power capacity.

"South Africa represents one-third of sub-Saharan Africa's economy, so slowdowns precipitated by lack of energy will ripple throughout the continent," Zoellick wrote.

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