SA will only accept $8.5bn green energy deal on good terms, president says

South Africa will only accept $8.5 billion in initial funding pledged by rich nations to help it shift from coal to greener energy if the terms suit national goals like debt reduction and job creation, President Cyril Ramaphosa said on Thursday.

Earlier this month, the United States joined Britain, France, Germany and the European Union to offer a multi-billion dollar package to help South Africa accelerate a transition from coal.

Join heated discussions with the Moneyweb community, and get full access to our market indicators and data tools while supporting quality journalism.

R63/month or R630/year

SUBSCRIBE NOW

You can cancel at any time.

South Africa, which is the world’s 12th biggest emitter of climate-warming gases and heavily reliant on ageing coal-fired power stations for its electricity, said the money would help it deliver on a more ambitious pledge to reduce emissions by 2030.

“This commitment from international partners does not mean we need to accept the offer, as such, or that we need to accept any unfavourable terms especially if the financing arrangements could impact negatively on the public fiscus of our country,” Ramaphosa told lawmakers when responding to questions.

He added that most of it would need to be in the form of grants, and that any loans would need to have concessionary rates.

He said most of the money was expected to help state-owned power utility Eskom, which is struggling under a mountain of debt and to keep the lights on in Africa’s most industrialised economy, reduce the nation’s over-reliance on coal-fired power plants supplying the bulk of domestic electricity.

Funding is also earmarked for job creation, electric vehicles and developing a new green hydrogen sector, as South Africa seeks to soften the blow to thousands of workers and communities in the coal-rich belt in the north of the country.

Energy Minister Gwede Mantashe has raised the concern that coal miners and other workers in that area would lose their jobs. But Ramaphosa said the funding was a way of ensuring that doesn’t happen, for example when coal-fired plants nearing the end of their lives are taken offline.

“Normally they would have been decommissioned and that would be the end: the town would close,” he said. “We are now saying, with funding we will be able to recalibrate, repurpose these power plants,” for renewable power, he said.