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Black & Veatch Bid for U.S. Aid on African Coal Plant Draws Fire

“A huge coal-fired power plant will have damaging effects in South Africa for 40 or 60 years,” said Sunita Dubey. Photographer: Nadine Hutton/Bloomberg
“A huge coal-fired power plant will have damaging effects in South Africa for 40 or 60 years,” said Sunita Dubey. Photographer: Nadine Hutton/Bloomberg

April 14 (Bloomberg) -- Black & Veatch Corp.’s request for $800 million in U.S. financing for a coal-fired power plant in South Africa is drawing complaints from environmental groups as the lender prepared to decide.

The U.S. Export-Import Bank board is set to vote today on backing Eskom Holdings Ltd.’s 4,800-megawatt project, according to a meeting agenda. The plant would be one of the world’s largest coal-fueled stations, and if approved would generate the most carbon pollution since the bank began tracking emissions from its projects in 2001, according to its data.

“A huge coal-fired power plant will have damaging effects in South Africa for 40 or 60 years,” said Sunita Dubey, director of GroundWork South Africa, an environmental group fighting the funding. “Why not invest in future technology?”

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 project, now called Kusile. Black & Veatch, which is closely held, had no comment before the board’s decision, said Linda Lea, a spokeswoman.

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 included 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.

Eskom Emissions

The Eskom power plant will emit 30 million metric tons a year, 50 percent more than the total for the previous year, according to data from the environmental impact assessment published on the lender’s website.

Phil Cogan, a bank spokesman, declined to comment before the vote. In an interview last month, Export-Import Bank President Fred Hochberg defended the project, saying it’s part of a strategy in South Africa to clean up the environment.

“South Africa has one of the most responsible, long-term plans,” Hochberg said March 29. “If South Africa’s economy continues to grow at 5 percent, they’ll have nothing more than rolling blackouts.”

“What are the alternatives?” he said. Without electricity, “they burn a lot of other things that are far worse for the environment.”

Full Costs

Dubey said the Export-Import Bank’s support provides legitimacy to the project, letting it obtain financing in commercial markets. The lender isn’t taking into consideration the full environmental cost of the project, she said.

“Electricity provides many health benefits worldwide and is a significant contributor to economic development, a higher standard of living, and an increased life expectancy,” Kristen Welker-Hood, director for environmental health at Physicians for Social Responsibility, wrote to Hochberg on March 14. “However, it does so at the cost of harming human health and compounding many of the major public health problems facing the industrialized world.”

Building the Kusile power plant would harm the health of South Africa’s population, she wrote.

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

To contact the editor responsible for this story: Larry Liebert at lliebert@bloomberg.net

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