SA moots new coal-plant closure to secure R46bn

South Africa will provide a new timeline for the shutdown of coalfired power plants in a bid to secure about R46.5 billion in climate finance, an agency in President Cyril Ramaphosa’s office said.

The timetable to be proposed to the Climate Investment Funds (CIF) in June aims to ensure the country remains on track to obtain funding under the so-called Just Energy Transition Partnership (JETP) – a $9.3 billion (about R172 billion) pact with some of the world’s richest nations.

Under the agreement, first announced in 2021, SA will receive the assistance on condition it cuts its dependence on coal, which accounts for four-fifths of the nation’s electricity output.

Early last year, SA told its partners in the pact it planned to delay the planned shutdown of coal-fired plants – 14 of which are operated by state utility Eskom – to address record electricity outages. The authorities didn’t set new closure dates.

“What we are presenting to the CIF is an adjustment to the decommissioning plan linked to an emissions target that we have to achieve,” said Neil Cole, a finance manager at the Project Management Unit, which is overseeing the JETP for SA, within the presidency.

If the proposal is accepted, SA will secure $500 million of 10- to 30-year loans with an interest rate of less than 1% and a grace period of eight years from the World Bank-affiliated CIF, Cole said.

That will “derisk” concessional loans planned by multilateral development groups such as the International Bank for Reconstruction and Development, which has pledged $570 million. The African Development Bank has allocated $255 million and the International Finance Corporation $70 million.

“We need to unlock the $500 million for the MDBs to take any kind of interest,” he said.

The funding is part of the JETP, under which France, the US, the UK, Germany and the European Union initially agreed to contribute funds to SA, with the Netherlands and Denmark joining the pact later. SA has communicated its plans to its JET partners. –