South African Coal Plant Wins U.S. Backing Over Environmentalist Protests

Black & Veatch Corp. won preliminary approval for $805.6 million in financing from the U.S. Export-Import Bank for a coal-fired power plant in South Africa, a move that drew criticism from environmental groups.

The board of the Washington-based lender voted today on a loan to support construction of a 4,800-megawatt plant being developed by Eskom Holdings Ltd. The plant would be one of the world’s largest coal-fueled stations.

“Ex-Im Bank financing supports hundreds of U.S. jobs, and also brings assurances of compliance with its environmental and social guidelines, including those for high-intensity carbon projects,” the bank said in a statement.

Eskom, South Africa’s state-owned electric utility, in 2008 said it would hire Overland Park, Kansas-based Black & Veatch for project management and engineering services to expand the power plant, a project called Kusile.

Government-backed financing has expanded following the economic crisis of 2008, producing record annual lending by the Export-Import Bank for loan guarantees, insurance and direct lending to U.S. exporters. The bank is backed by the U.S. government, and provides a guarantee to boost exports.

The increase in lending has resulted in more projects that pollute. Bank-supported ventures approved in the past fiscal year will emit more than 20 million metric tons of carbon pollution annually, the most since the lender started releasing data in 2001.

Most Carbon Pollution

The Eskom power plant alone will emit 30 million metric tons a year, 50 percent more than the total for the Export- Import Bank’s projects in the fiscal year that ended Sept. 30, according to data from the environmental impact assessment published on the lender’s website. It would generate the most carbon pollution since the bank began tracking emissions from its projects in 2001.

“Ex-Im Bank directors’ decision to support Kusile was made despite their full knowledge of the unacceptable damage the project will cause,” said Sunita Dubey, U.S. representative of Groundwork South Africa, a group opposing Kusile. They “disregarded the impact on people’s health and livelihoods.”

Linda Lea, a spokeswoman for Black & Veatch, declined to comment.

The loan will be made to Eskom, which will then use the funds to hire Black & Veatch for engineering services.

The Export-Import Bank said the new power plant will include sulfur-dioxide scrubbers and an air cooling system and is designed to allow the use of carbon-capture technology in the future.

The board decision today is preliminary. Details of the lending decision must be sent to Congress, which has 35 days to review it.

To contact the reporter on this story: Mark Drajem in Washington at mdrajem@bloomberg.net

To contact the editor responsible for this story: Steve Geimann at sgeimann@bloomberg.net

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