Ex Im Board Provides Preliminary Approval For $805 Million In Financing For Kusile Power Plant In South Africa
The board of directors of the Export-Import Bank of the United States voted today to grant preliminary approval for a $805.6 million direct loan to South Africa's state-owned electric power utility, Eskom, Limited. A final vote by the board is anticipated in approximately 35 days, following the mandatory Congressional notification period.
The financing, if finally approved, will support Eskom's purchase of engineering and construction management services from Black & Veatch International of Overland Park, Kansas which will be used to construct the Kusile power plant located in the Emalahleni area of the Mpumulanga Province . Hundreds of highly-skilled American senior engineers and support personnel in Ann Arbor, Mich., Raleigh, N.C. and Kansas City will be employed by Black & Veatch each year during a five year period.
South Africa is one of nine countries identified by Ex-Im Bank as offering the greatest export sales opportunities to U.S. companies. In winning this contract with the Bank's support, Black & Veatch overcame competition from several major European engineering companies. The Kusile plant will consist of six 800 MW units, for a total capacity of 4,800 MW. It is the second of two plants being constructed by Eskom in order to meet the country's increasing demand for electric power.
The Kusile plant is designed with advanced technology and equipment, including highly efficient supercritical boilers. Eskom undertook a comprehensive environmental assessment for the project, and a number of environmental safeguards, including scrubbers to control sulfur dioxide and equipment to minimize particulate emissions were included in the plant's design. Notably, Kusile will be the first coal-fired power plant in South Africa to include sulfur dioxide scrubbers. To help conserve water, the plant will use an air cooling system. The plant also is designed to be carbon capture and sequestration ready, which means it is configured in a way that will facilitate subsequent installation of equipment to capture and transport carbon emissions to a permanent storage location.
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. Throughout this process, Ex-Im Bank met on several occasions with officials of environmental non-governmental organizations (NGOs) and project stakeholders to address their concerns relating to the potential environmental and social impacts of the Kusile project. Ex-Im Bank took into account all of the information and comments it received from these meetings on the project's potential environmental and social impacts.
The application to finance the Kusile project underwent a review that focused on aspects related to its carbon dioxide production, and South Africa's long-range goals to reduce its carbon dioxide production. Eskom, as a state-owned energy enterprise, has announced its goal to significantly reduce its long-term dependence on coal by 2025.
Included in the Bank's Carbon Policy is enhanced due diligence and improved transparency in the tracking and reporting of CO2 emissions from projects that the Bank supports. No other export credit agency tracks or discloses this information to the public. The board took its vote today after considering the results of a complete financial, technical and environmental review of the project.
In fiscal year 2010, which ended September 30, 2010, Ex-Im Bank authorized a record $812 million to support exports to sub-Saharan Africa. The bank projects FY 2011 authorizations for the region may ultimately exceed $1.5 billion. Ex-Im Bank is an independent federal agency that helps create and maintain U.S. jobs by filling gaps in private export financing at no cost to American taxpayers. The Bank provides a variety of financing mechanisms, including working capital guarantees, export-credit insurance, and financing to help foreign buyers purchase U.S. goods and services. By charging fees and interest on all loan-related transactions, Ex-Im Bank is self-sustaining and is able to cover all operation costs and potential losses while also producing revenue. The Bank has generated $3.4 billion for U.S. taxpayers over the past five years.
In fiscal year 2010, Ex-Im Bank authorized a record high of approximately $24.5 billion in loans, guarantees and insurance (including more than $5 billion in authorizations for small businesses), supporting an estimated 230,000 American jobs.