South Africa Seeks Cheap Finance for Cleaner Power Generation

Eskom results held at Megawatt Park in Johannesburg on Tuesday, July 30 2019. Pic: Waldo Swiegers / Bloomberg

As part of its plans to move away from heavily polluting coal, South Africa is seeking cheap financing for infrastructure projects worth more than 400 billion rand ($27.6 billion).

Under a financing facility backed by rich nations and development finance institutions, South Africa plans to build more than 180 billion rand of cleaner power generation, 120 billion rand in transmission equipment, substations, transformers, and distribution technology.

The country currently burns coal to generate more than 80 per cent of its electricity, making it the 12th largest carbon emitter in the world. The government adopted a more ambitious emissions reduction target last month ahead of the UN climate conference in November.

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“South Africa’s message: We are prepared to make a substantial carbon reduction, but this must be financed by developed countries on concessional terms,” presidency official Rudi Dicks said in a presentation.

The state-owned power company Eskom has said it plans to seek up to $12 billion (roughly 180 billion rand) from global lenders to transition away from coal.

However, Dicks’ presentation made clear that the figure only accounted for the cost of building more than 7,000MW of new renewable energy and natural gas to replace coal units that will be decommissioned.

Additionally, the country said it was seeking grants and low-interest loans to pay for the expansion of its transmission grid of at least 8,000 km (4970 miles), to strengthen distribution corridors, and to set up a fund for economic diversification in a province with many coal plants.

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The United Kingdom, the United States, Germany, and France, as well as French and German development banks and the World Bank, could contribute funds.

In August, Eskom announced plans to decommission between 8,000 and 12,000 MW of coal over the next decade.

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