Who is paying for our next big power station?

Istations aside for a second, that still leaves us with the very urgent question: where will the financing for a third mega coal-fired power station come from?

Both Medupi and Kusile are very delayed, and costs have continued to escalate almost out of control. Delays have added a further R14bn to the cost of Medupi.

However, even with this R14bn included, the official R150bn price tag for Medupi excludes a flue gas desulphurisation plant that must be added to the coalfired power station (R10bn to R15bn) and the cost of interest during construction.

Medupi was the recipient of a controversial World Bank loan, and 100 percent of the financing for Kusile has yet to be secured.

At the same time, international financing institutions such as the

BOTH MEDUPI AND KUSILE ARE VERY DELAYED, AND COSTS HAVE CONTINUED TO ESCALATE

World Bank and the US Ex-Im bank are showing almost no appetite for paying for new investments in coal-fired power stations (unless in exceptional circumstances). These banks are increasingly recognising that there is no future in coal, and are refusing to continue to invest in coal-fired power stations.

On the other hand, Eskom’s credit rating has recently been downgraded by Moody’s (making investments in Eskom more risky than investments in South Africa), and the utility is already highly indebted with R200bn debt on its books.

Nersa has granted Eskom a yearly tariff increase of 8 percent, half of the 16 percent the utility was hoping for, and according to the utility’s own funding model, it has depleted all sources of income other than bonds.

And a large share of Eskom bonds has been (and will continue to be) bought up by the Government Employees Pension Fund – meaning that government employees are taking on a large chunk of Eskom’s credit risks.

So, who is going to pay for the next major coal-fired power station (in an area with severely limited water resources)?

The only answer that seems likely is that rather than reigniting the South African economy, a third massive coal-fired power station will throw this country much further into debt, and at the end of the day, it will be ordinary South Africans who pay the price.

Melita Steele is a climate and energy campaigner for Greenpeace Africa.

N AN interesting twist of events, South African taxpayers had barely recovered from the news of delays with the Medupi coal-fired plant and the accompanying financial pressures when Minister Rob Davies announced that the cabinet had approved a third...