RPT-US Ex-Im bank gives nod to S. Africa coal plant loan

Thu Apr 14, 2011 7:23pm EDT

Related Topics

* S. African plant expected to be completed in five years

* Loan needs final vote by board in about 35 days

* Plant ready for carbon capture, if technology develops (Repeats for wider distribution)

By Timothy Gardner

WASHINGTON, April 14 (Reuters) - The U.S. Export-Import Bank on Thursday gave initial approval for an $805 million loan to help develop a high-tech giant coal plant in South Africa, a project criticized by environmentalists for pollution it would emit.

The bank granted the approval to South African utility Eskom [ESCJ.UL] to help build the 4,800 megawatt Kusile power plant, which is already under construction in South Africa's Mpumulanga Province.

A final bank vote is expected in about 35 days, following a mandatory Congressional notification period.

If approved, the financing will support Eskom's purchase of engineering and construction management services from Kansas-based Black & Veatch International, a private company.

South Africa is one of nine countries identified by Ex-Im Bank as offering the greatest export sales opportunities to U.S. companies.

The bank says the Kusile plant is designed with advanced technology and equipment, including highly efficient boilers which emit far less of the main greenhouse gas carbon dioxide than traditional coal-fired plants.

It also said the project would provide hundreds of jobs to American senior engineers and support personnel during a five-year period.

But environmentalists complained the plant, which is expected to be completed in about five or six years, will bring pollution to surrounding poor communities that will not get electricity from the project.

They also said the plant could release large amounts of carbon dioxide when completed in a country that will host global climate talks later this year.

"Ex-Im Bank's decision places US climate change negotiators in a very tough position," said Erich Pica, the president of Friends of the Earth U.S.

"How can they convince the world they care about climate change this December? This undermines their credibility."

Eskom undertook an environmental assessment for the project, and the plant would be the first in South Africa to include scrubbers to reduce emissions of sulfur dioxide, the bank said.

The plant is designed to capture carbon dioxide and store it underground permanently. But such technologies are not yet commercially available for projects the size of the Kusile plant. (Reporting by Timothy Gardner; editing by Jim Marshall)

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