Rich nations offer debt guarantees on SA climate deal

22 May, 2022 - 00:05 0 Views
Rich nations offer debt  guarantees on SA climate deal

The Sunday Mail

A group of the world’s richest nations offered South Africa debt guarantees as part of a proposed US$8,5 billion deal designed to cut the nation’s reliance on coal for power generation, people familiar with the talks said, potentially resolving one sticking point in the negotiations.

The guarantees would enable South Africa or companies such as state power utility Eskom to borrow money needed to close down coal-fired power plants and enable the generation of renewable energy, one of the people said.

The people asked not to be identified as the talks aren’t public.

Such an arrangement would alleviate pressure on the South African government to guarantee any debt Eskom may need to fund its transition to renewable energy, the person said.

By March this year, the Treasury had extended R560,1 billion (US$35 billion) of guarantees to state companies, with Eskom accounting for about 79 percent of that.

Concessional loans and grant funding would be included in the support, which was announced at the COP26 climate summit last year, and may be extended over the next three to five years.

The deal is being funded by the US, the UK, Germany, France and the European Union.

In addition to funding Eskom’s transition, some of the money could be used to strengthen South Africa’s power grid and compensate coal-dependent communities when power plants close.

The government also wants to use some of the money to kickstart its green hydrogen and electric-vehicle industries.

Eskom and the EU declined to comment.

South Africa’s Treasury and the UK’s COP unit didn’t immediately reply to questions.

Representatives for the US Treasury Department and the office of US Special Presidential Envoy for Climate John Kerry didn’t respond to requests for comment.

The offer appears to be the latest effort to avoid increasing the South African state’s liabilities.  −Bloomberg

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