JOHANNESBURG, June 15 (Reuters) – South Africa’s finance ministry has announced billions of dollars in loans to reduce carbon emissions for power company Eskom, which the government has blocked. A consultant has been appointed to come up with a plan for approval by August. new debt.
Wealthy nations, including the UK, France, Germany, the European Union and the US, will join forces at the November 2021 United Nations Climate Change Talks to help South Africa cut emissions and accelerate the transition away from coal, which accounts for the majority of its electricity generation. promised $8.5 billion.
Of that amount, more than $3 billion was to be loaned to state power company Eskom. Eskom’s aging infrastructure and crippling debt have caused the country to experience one of the worst blackouts in history.
The government announced in February that it would assume some of Eskom’s debt, but on the condition that it would not take any additional loans for three years without written permission from the finance minister.
Two diplomats, who asked not to be identified because they were not authorized to speak publicly, told Reuters that the government’s terms meant that international commitments to green funding had stalled.
The theoretically obvious solution for the Treasury Department to make exceptions and grant permission would require complex recalculations and more parliamentary proceedings, said a senior government official not authorized to speak to the media. .
In response to a Reuters question, South Africa’s finance ministry said it had appointed an unnamed consultant, along with the office of President Cyril Ramaphosa, to find a way to resolve the issue.
The government said it was considering “the best mechanism for disbursing the $8.5 billion in funds from the International Partners Group without adversely impacting Eskom’s balance sheet,” and said it was seeking funding from each country and multilateral. referred to a consortium of interagency agencies.
He said he is in regular contact with international donors and plans to submit a report on a solution by August.
Worst energy crisis on record
South Africa is in the midst of its worst energy crisis ever, with power supply shortages causing rolling blackouts of hours each day.
Eskom, which supplies more than 80% of South Africa’s electricity through 15 mostly coal-fired power plants, will need to invest more than $7 billion in its transmission grid by 2027, according to official estimates. It accounts for the largest proportion of spending over the four years.
Grid upgrades are partly necessary to accommodate more renewable energy.
It will also allow the decommissioning of three power plants, which the government is considering postponing due to insufficient power generation capacity.
Rudy Dix, head of project management at South Africa’s president’s office, said there was an “urgent need to clarify” whether international loans would be accepted.
He also said the government could release a report by next month on a review of the decommissioning schedule for the Eskom power plant to help Eskom utilities meet electricity demand.
Of the $8.5 billion pledged to South Africa, $3 billion comes from the Climate Investment Fund (CIF), a leading multilateral investor in developing countries.
“We remain committed to supporting a just transition from coal to clean power in South Africa,” the company said in a statement.
Reported by Promit Mukherjee and Carien du Plessis.Editing: Olivia Kumwenda Mutambo, Barbara Lewis
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