Page last updated at 08:13 GMT, Friday, 9 April 2010 09:13 UK

World Bank backs loan for South Africa power station

Powerlines in South Africa
South Africa was hit by major black-outs in 2008

The World Bank has approved a $3.75bn (£2.45bn) loan for a huge new coal-fired power station in South Africa, despite environmental concerns.

Utility firm Eskom says the plant is needed to end power shortages, which have recently plagued South Africa.

But environmentalists say the World Bank should not finance plants which could increase carbon emissions.

The US, the largest lender to the World Bank, the UK and the Netherlands abstained from the vote.

Eskom said the 4,800 megawatt plant would help South Africa meet its increasing demand for energy, and even export to neighbouring countries.

World Bank vice-president for Africa Obiageli K Ezekwesili said South Africa needed a better power supply to help raise living standards.

"Access to energy is essential for fighting poverty and catalyzing growth, both in South Africa and the wider region," the AP news agency quotes her as saying.

Some $475m of the loan will be used for renewable power, such as wind and solar projects.

This is the second major loan for the construction of the plant.

Last year, the African Development Bank $2.77bn (£1.81 bn) to the company to build the Medupi power plant.

A group of 125 campaign organisations had sent a letter to the World Bank, arguing that the project would not bring electricity to the poor but would benefit large mining houses and smelters, reports say.

A complaint submitted this week to the World Bank's independent complaint body, on behalf of residents living near Medupi power plant, claims the project violates World Bank policies, reports Talk Radio 702.

The plant is expected to be commissioned by February 2012.

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