S.Africa's Zuma backs World Bank loan for Eskom: paper

JOHANNESBURG (Reuters) - South African President Jacob Zuma has written a letter to the World Bank supporting an application by power utility Eskom for a $3.75 billion loan, Sake24 reported on Tuesday.

Eskom expects the World Bank to make a decision on a loan programme of up to $5 billion in the first half of next year, a senior company official said on Monday.

Eskom has been rationing electricity since early 2008 when the national grid nearly collapsed, forcing mines and smelters to shut and costing South Africa billions of dollars.

Earlier this month the World Bank said on its website Eskom had applied for the initial 3 tranches of the loan, amounting to $3.75 billion, to fund projects at its Medupi power station, and renewable energy and low-carbon energy efficiency programmes.

Sake24, the website of newspaper group Naspers, quoted Treasury spokesperson Thoraya Pandy as saying Zuma had written to the World Bank "to emphasise how important Eskom's development programme is for South Africa".

The utility has embarked on a 385 billion rand power supply expansion programme, to enable it to meet fast-rising demand in Africa's biggest economy.

The government says it is looking at ways to help the utility bridge its funding gap without resorting to annual tariff increases of 45 percent over the next 3 years which Eskom applied for in September.

Critics say increases of that magnitude would stoke inflation and force key industrial companies to shut parts of their operations.