Gigaba met World Bank on Eskom

Finance Minister Malusi Gigaba met with representatives of the World Bank last week to discuss issues relating to Eskom Holdings SOC Ltd., according to two people familiar with the meeting.

Gigaba met with the bank on Nov. 3 to discuss funding options available to the state-owned power utility, said the people, who asked not to be identified because the information is not public. One of the topics that came up in the meeting was nuclear energy, one person said. South African Airways, the national airline that is struggling to meet debt obligations, was also discussed at the meeting, said one of the people.

Eskom last year began a process to add 9,600 megawatts of nuclear power capacity beyond its single existing plant by issuing a request for information from vendors. There were 38 responses to the notice, Kelvin Kemm, chairman of the South African Nuclear Energy Corp., told lawmakers in Cape Town on Tuesday.

South Africa’s nuclear investment plans have become a focal point for critics of President Jacob Zuma’s policies.The affordability of the program was a key point of dispute between Zuma and former Finance Minister Pravin Gordhan and the procurement process stalled in April after a provincial court ruled that the government didn’t follow the correct procedure in pursuing the nuclear program.

Gigaba’s spokesman, Mayihlome Tshwete, said the meeting between the Treasury and the World Bank did not include discussions on the nuclear plan and the interaction was about the financing of the power utility’s Medupi project.

The World Bank didn’t immediately respond to questions sent by email but confirmed receipt.

Gigaba said Oct. 26 that South Africa can’t afford to build new reactors for at least five years and that it doesn’t need more baseload, or continuous, power capacity. Nuclear still remains a part of the energy plan and the government will look at it as an option when needed and when it can afford it, he said.

Energy Minister David Mahlobo, who was appointed last month, said on Oct. 23 that a legal procurement process would be followed for a nuclear program, noting the Western Cape High Court decision.

The World Bank has previously supported energy projects through Eskom. However, an inspection panel from the organization in 2012 found instances of non-compliance in its award of a $3.75 billion loan to the utility for construction of the Medupi coal-fired power plant.The impacts and risks for other local water users weren’t properly considered and the project would place strain on water resources in an area already suffering from scarcity, it said at the time.

The discussions between Gigaba and the World Bank also included options to assist South African Airways, according to one of the people.