South Africa expects the United States to abstain from voting on its disputed application to the World Bank for a loan to fund a power project, on which a decision is likely in early April, a minister said on today.

The United States and Britain have threatened to withhold support for the $3.75 billion loan for a coal-fired plant in South Africa, expanding the battleground in the global debate over who should pay for clean energy.

South Africa's Public Enterprises Minister Barbara Hogan told a media briefing that a vote against the loan would be the "most unfortunate thing" to happen to Africa's biggest economy, because it would continue to face a power crunch. "The Americans are under a bit of pressure and they have indicated to us that they are not going to vote against but they'll abstain from voting," she said.

"They're under particular pressure from their own lobbies."

She said Britain and France were set to back the loan. South Africa is reliant on coal for 95% of its electricity needs, and is the worst emitter on the continent. South Africa's state-owned utility Eskom -- which falls under Hogan's docket -- is seeking the loan intended to help expand power generation capacity to meet fast-rising demand in Africa's biggest economy.

Eskom was forced to step up investment after power cuts crippled the mining and manufacturing industry in early 2008. The utility has suffered due to a lack of investment in new capacity and ageing power stations as demand soared. Hogan said the decision on the loan was due next month. "The decision is due to be taken early April. I think it's around the 8th of April," Hogan said.

"If there is a vote against it (the loan), it will probably be the most unfortunate thing that has happed to this country in terms of its economy and in terms of developmental needs.

"This isn't just playing around with... little ideas about having nice clean energy. It's really about gearing this country for moving forward," she said. She said the loan sought by South Africa from the World Bank would not have any macroeconomic conditions attached.

Tariffs may rise further

Speaking at the same briefing, Hogan's colleague, Energy Minister Dipuo Peters, said South Africa -- which increased power tariffs last month -- may have to raise electricity prices further if it did not secure the loan. "If we don't get this loan we will have to burden customers with having to pay more," she said.

South Africa's power regulator allowed Eskom to hike electricity prices by a nominal 24.8 percent this year, and by 25.8% and 25.9% respectively for the following two financial years. Cash-strapped Eskom had wanted to hike prices by 35% a year for three years, to help it pay for additional generation capacity estimated to cost R461 billion ($62.12 billion).

South Africa's electricity is among the cheapest in the world, partly due to a government policy of underpricing power to attract industry to the country. Hogan said if no new significant electricity capacity was built for the short to medium term, the country would suffer. "We are going to have continual blackouts. There is not simply going to be enough energy going forward," Hogan said. -Reuters