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Picture: FREDDY MAVUNDA
Picture: FREDDY MAVUNDA

The finance ministry has appointed a consultant to come up with a plan by August to allow Eskom to accept billions in loans designed to help it cut its carbon emissions despite the government having blocked it from taking on new debt.

Wealthy countries — including Britain, France, Germany, the EU and the US — committed $8.5bn at UN climate talks in November 2021 to help South Africa cut its emissions and accelerate a shift from coal.

Of that, over $3bn was to be loaned to Eskom.

In February, the government said it would assume some of Eskom’s debt, but on condition it  would get no more loans for three years, unless the finance minister granted written permission.

Two diplomats, who asked not to be named because they are not authorised to speak publicly, said the government’s conditions meant international pledges of green funding were in limbo.

The theoretically obvious solution of the Treasury making an exception and giving permission would require complex recalculations and more parliamentary procedures, said a top government official, who is not authorised to speak to media.

In a response to questions, the national Treasury said it, along with the Presidency, had appointed a consultant it did not name to find ways to resolve the issue.

The government is looking at “best mechanisms to disburse the $8.5bn International Partners Group funding without negatively  affecting Eskom’s balance sheet”, it said, referring to the consortium of countries and multilateral agencies providing the funding.

It said it was in regular contact with the international donors and would present a report on solutions by August.

According to official estimates Eskom will have to invest  more than $7bn into its transmission grid by 2027, its biggest expenditure over the next four years.

The upgrade is partly necessary to allow it to  introduce renewable energy onto the grid.

It would also allow the decommissioning of three power plants, which the government is considering delaying because of the shortages of generation capacity.

Rudi Dicks, the head of project management at the Presidency, said there was a need to “clarify as a matter of urgency” whether the international loans could be accepted.

He also said that by next month the government could release a report on its review of the decommissioning schedules of Eskom’s power plants to help the utility meet electricity demands.

Of the $8.5bn pledged to South Africa, $3bn is from Climate Investment Funds, a leading multilateral investor in developing countries.

In a statement, it said it remained “committed to supporting South Africa’s just transition from coal to clean power”. 

Reuters


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