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World’s wealthiest nations’

$8.5bn climate finance deal will

help SA’s energy transition

SOUTH AFRICA A group of the world’s richest nations offered that, according to Bloomberg.
South Africa debt guarantees as part of a pro- South Africa is the world’s 13th-biggest
posed $8.5bn deal designed to cut the nation’s source of greenhouse gases, with about two-
reliance on coal for power generation, Bloomb- fifths of its output coming from Eskom. Eskom’s
erg reports. The potential funding, available over current ZAR416bn ($26.3bn) debt burden is
three to five years, was announced at the COP26 believed to be unsustainable, even though 74%
climate talks in Glasgow in November 2021. of it is covered by government guarantees. Ear-
Under the arrangement, the US, UK, Ger- lier in May, Eskom warned that it needed the
many, France and the European Union plan to debt to be resolved in order to accept grants and
provide finance to help the country cut its use of loans from wealthy nations.
coal, which is used to generate more than 80% of The structure of the deal, details of which are
its electricity. The guarantees would enable com- still being negotiated, shouldn’t add to Eskom’s
panies such as state-owned power utility Eskom debt burden. “I doubt that we could proclaim
to borrow the money needed to “close down success if we make it worse and add to what
coal-fired power plants and enable the genera- exists,” said Daniel Mminele, the head of the
tion of renewable energy,” sources taking part in government’s negotiating team, as quoted by
negotiations told Bloomberg. Bloomberg. “The debt problems are part and
The funding will come as concessional loans parcel of what the solution is meant to help
and grants and is expected to alleviate pressure address. Our partners are well aware of that.”
on the South African government to guarantee According to the news agency, the offer
any debt Eskom may need to fund its transition appears to be the latest effort to avoid increasing
to renewable energy, said the insider. By March the South African state’s liabilities. If successful,
this year, the National Treasury had extended it may improve the assessment of the country’s
ZAR560.1bn ($35bn) of guarantees to state com- debt, which is currently rated below investment
panies, with Eskom accounting for about 79% of grade.™

P14 www. NEWSBASE .com Week 21 26•May•2022