Public Enterprises Minister Pravin Gordhan says the R131 billion COP26 climate financing to help SA transition from coal to low-carbon energy has nothing to do with covering Eskom debt.
Gordhan said this when Ministers in the Economics cluster responded to oral questions in the National Assembly on Wednesday.
“This finance is not for the debt of Eskom. This finance is for the transition project itself that was announced between several developed countries and our President Cyril Ramaphosa at the beginning of COP26. But let me clarify, this is an offer from the developed countries, it is not a deal.”
IFP MP Elphas Buthelezi had asked what the plans were for the climate change financing that was recently announced in Glascow during climate change negotiations.
Gordhan said one of the issues at COP26 that were quite sharply debated was who would finance the transition to lower carbon energy.
He said in South Africa’s case, 41% of the country’s emissions actually come from electricity production and therefore, on the one hand, “we have got to prepare for the transitioning of Eskom and other such equipment or facilities that we have at a national level to a more climate friendly and decarbonised state”.
He said South Africa put forward three projects for consideration for those who would be interested in financing the transition, which in the main, has to be the developed countries, through or with multilateral financial and other institutions.
“And those three projects were the Eskom just energy transition project, secondly the green hydrogen project and thirdly, transitioning SA’s automobile industry to the production of electric vehicles,” he said.
Gordhan said the just energy transition is a project that Eskom has developed at the Komati power station and once it gets the appropriate backing – financially speaking – it would have an important impact in terms of repurposing the power station, retraining workers who are currently employed at the power station and preparing new workers into the new energy situation that we would be moving to while mitigating the impact on communities that are in some relationship with the power station or the coalmines themselves.
He said negotiations will now take place at a technical level to appreciate whether these offers will be compatible with SA’s financial requirements and capabilities.
“The Eskom debt issue as we know has been very much with us. But let me emphasise that this financing has nothing to do with Eskom debt.
“Secondly, the Eskom debt was accumulated because a decision was made by previous governments to finance the development of Medupi and Kusile through the tariff applications to Nersa and not by any equity injections. Thirdly, there are various proposals that we will consider together with the National Treasury and other stakeholders how the Eskom debt should be dealt with and clearly, among the role-players that have to take part in this process will be government itself, the PIC…
“What we will have soon is a pro-forma balance sheet of a new Eskom with a different distribution of debt with the acceptance and buy in of the lenders that have lent money to Eskom.”
Cabinet has called on all eligible businesses affected by the recent civil unrest in KwaZulu-Natal and Gauteng to apply for industrial loan support at zero-percent interest, under the R3.75-billion Economic Recovery Support Package offered by government.
“The Department of Trade, Industry and Competition (the dtic) and its development finance institutions – the Industrial Development Corporation and National Empowerment Fund – have put together a funding package to support various business recovery interventions. This includes the rebuilding of infrastructure, equipment, fittings for premises, stock and working capital,” a Cabinet statement said on Thursday.
The funding will help to alleviate the socio-economic challenges facing businesses affected by the unrest.
Cabinet has welcomed and endorsed the announcement by JP Morgan to provide financial and non-financial support to the tune of R340 million through the Abadali Equity Equivalent Investment Programme (EEIP).
The programme consists of Abadali Fund – a Black Business Growth Fund and Abadali Grant (R40 million).
Cabinet also welcomed this week’s gazetting of the regulations that increase the threshold for embedded generation from the current one megawatt (MW) to 100 MW.
In June 2021, President Cyril Ramaphosa announced the amendment of Schedule 2 of the Electricity Regulation Act, 2006 (Act 4 of 2006) to increase the National Energy Regulator of South Africa’s licensing threshold for embedded generation projects to allow for more private generation of electricity.
“Companies in energy-intensive sectors will now be able to generate their own electricity without the need for a licence. The new generation capacity will increase energy security by reducing reliance on the power grid and unlocking significant private sector investment.
“These initiatives will support inclusive economic growth and job creation within the small and medium-sized businesses, particularly in the manufacturing and green economy sectors,” Cabinet said.
Meanwhile, South Africa is expected to participate at the upcoming World Expo.
Cabinet approved the participation in December 2019 but the event was subsequently postponed due to COVID-19.
“The multinational event, which is held every five years in different countries, provides a large and attractive market to showcase South African goods and services to a global audience. It will be held as a hybrid of virtual and on-site exhibitions in Dubai, United Arab Emirates, from 1 October to 31 March 2022,” Cabinet said.
The dtic will next week host a media briefing to unpack South Africa’s participation at the World Expo 2020.