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SOUTH African energy company Eskom is to get a €1.86b ($2.8b) loan from the African Development Bank (AfDB) to build a new power plant.

The Medupi Power Station will have a capacity of 4778 MW and is currently under construction in Lephalale, in Limpopo Province, South Africa. AfDB hopes that the investment will help to end South Africa’s energy crisis. The country has suffered blackouts and Eskom has resorted to rationing electricity in an effort to curb demand.

The 20-year loan is being guaranteed by the South African government. Medupi will be a coal-fired, dry-cooled power station, which uses less water than conventional plants. Three other such plants are already operational in the country. The plant is expected to have an operational life of 50 years and will cost around R80b ($10.8b). 53% of the cost will come from equity, the remainder from loans.

AfDB President Donald Kaberuka says: “South Africa's energy problem has been a major impediment to Africa’s leading economy. The Bank is pleased to be associated with this project. We look forward to working with South Africa towards achieving energy security. This operation should be seen in the context of the Bank’s ongoing efforts to help Africa bridge the infrastructure gap.”