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South Africa: African Development Bank Board approves third monitoring report on management action plan for Eskom’s Medupi Power Project
The African Development Bank has approved the recommendations of the third Monitoring Report of the Independent Review Mechanism on the Implementation of the Updated Management Action Plan for Eskom South Africa’s Medupi Power Project.
The Medupi Power Project, which is currently under construction, is a 4,764 MW coal-fired power plant in Lephalalae, Limpopo Province, South Africa.
The approval by the Board of Directors of the Bank paves the way for the Independent Review Mechanism (IRM) to undertake the fourth annual monitoring of the Medupi Power Project in 2019, in line with the monitoring process approved by the Bank on 13 February 2013.
The IRM established that Management of the Bank has made significant progress in deepening engagement with the management of Eskom Holdings Ltd since the last monitoring exercise, to address the social and environmental issues raised by complainants. This enhanced engagement has led to the successful resolution of many issues noted in the Compliance Review Report prepared by the IRM in December 2011 namely, the settlement of graves and heritage issues, completion of the regional environmental and social assessment report, and improved communication with the communities affected by the project.
The report noted, however, that there are two critical outstanding and interlinked issues reported by the IRM, which are still to be addressed. The first is the state of non-compliance with air quality minimum emission standards and spikes in emissions due to occasional breaches of the national air quality standards. The second issue relates to securing financing for the Flue-Gas Desulphurization Units (FGD) and the full investment of the Mokolo-Crocodile Water Augmentation Project 2 (MCWAP- 2A). The FGD units, when fully installed, will be retrofitted to enable reduction of sulfur emissions while the Mokolo-Crocodile Water Augmentation Project will ensure the availability of adequate water to operate the FGD plant. The Board took note of the assurances given to the IRM by Eskom and the South African authorities about their resolve to secure the necessary financing for the FGD and MCWAP-2A projects.
Also, the IRM reported on the rehabilitation of areas of the Mokolo river affected by sand mining activities that are yet to be completed. Relevant authorities are said to be working towards completing the restoration work.
The third IRM Monitoring Report proposes to conclude on these matters and provide a further assessment of the South African government’s financing commitments for Eskom during the next IRM monitoring.
The Complaint about this project was registered in October 2010, with complainants requesting for investigations into plausible violation of a wide range of Bank policies related to environmental impacts on the air, water and land quality around the project and inadequate public consultations with host communities.
In September 2018, the African Development Bank approved a ZAR 2.886 billion (US$217.9 million) loan to Eskom Holdings Ltd, towards the upgrade and expansion of its transmission facilities. The funding supports the Eskom Transmission Improvement Project (ETIP).
Eskom operates South Africa’s national grid, which comprises 381,594km of high, medium and low voltage power lines and 285,737MVA of substation capacity fed from 30 power stations with a nominal capacity of 45,561MW. The utility contributes approximately 77 percent of the total installed power capacity in the Southern Africa Power Pool (SAPP).
Eskom is central to the realization of the Bank’s New Deal on Energy for Africa strategy, Ongoing financial, technical and capacity support for the utility aligns with the Bank’s High 5 priorities.