It is reported that the World Bank has pressed the US government to support a USD 3.75 billion loan that would allow South Africa to build a coal fired power station.

The controversial project, proposed by Eskom, the country state owned Electricity Company will increase carbon emissions and potentially contribute to global warming. But officials say that new generating capacity is vital if South Africa is to avoid a recurrence of the black-outs that shook business confidence early in 2008.

Mr Jamal Saghir the World Bank director of energy said "We cannot afford to see Eskom or the South African power sector in crisis. This will have a major backlash for the economy of the country and the economy of the region."

He said that bank officials had conducted technical discussions with their US counterparts. Just over USD 3 billion of the loan would fund a new coal-fired power station at Medupi in Limpopo province while the rest would go on clean energy projects.

Neither the US nor the UK have said how they will vote when it comes before the World Bank board on April 9.

In an interview with the Financial Times, Ms Dipuo Peters the South African energy minister, said that carbon emissions would rise after the power station was built, before levelling off and then falling. She said the new capacity was also needed to give electricity to the 15% of homes that are not connected to the national grid.

(Sourced from http://www.ft.com)