Presidential Climate Finance Task Team head Daniel Mminele, who is responsible for putting together an investment plan for $8.5bn in climate finance pledged to SA, has distanced the group from reports suggesting the package will comprise loans almost exclusively and include very little grant funding.
Business Day asked Mminele to comment on details of the Just Energy Transition Investment Plan (JET-IP) reported by Climate Home News, a UK-based news site, which said it obtained a leaked copy of summary notes of the financing provisions.
While Mminele didn’t mention the article by Climate Home News specifically, he said the task team was “aware of the recent speculative coverage about the [JETP-IP] and have been concerned to note the perpetuation of inaccuracies in some of the reporting”.
“The numbers cited do not reflect the current status of the financing package, details of which will be provided once the plan is released to the public,” Mminele said.
The JETP-IP for $8.5bn in climate finance pledged to SA by the governments of the UK, the US, France, Germany and the EU at COP26 in Glasgow, Scotland, in 2021, was accepted by the cabinet last week but it has not been made available to the public yet.
Climate Home News reported that, the investment plan appears to contain just $230m (2.7% of the package) as grants by the donor countries.
According to the news site, about $4.6bn — just over 50% of the funding — would be made available in the form of concessional loans, while the other $3.7bn would include a mix of commercial loans and investment guarantees.
The rough balance of the funds would come from the Accelerating Coal Transition initiative of the Climate Investment Funds (CIF), it added. The CIF is a multilateral climate finance mechanism, with African Development Bank an implementing agency.
‘Dovetail’ process
However, a document published recently by the Department of Forestry, Fisheries & the Environment and the CIF, which details the CIF’s investment plan for SA’s coal transition, states that while both plans are being prepared in co-ordination with the SA government the CIF’s plan will “dovetail” with the JETP-IP to avoid parallel processes. The document states that the CIF will leverage the $8.5bn JETP package to unlock further funding.
The CIF has proposed a financing package of $2.6bn the majority of which is being earmarked for the decommissioning and repurposing of Eskom coal-fired power stations. This will include $500m of loan funding directly from the CIF and $2.1bn in both public and private finance to come from institutions such as the African Development Bank, the International Finance Corporation, and the World Bank.
Mminele said it was “understandable that speculation around the yet to be circulated final draft [of the JETP-IP] is front of mind given that the investment plan is an “important initial five-year road map for a systems approach to securing an inclusive and just energy transition for SA”.
“Rest assured, government plans to share the accurate and final version of the JET-IP with the public in the near future,” he said.
Speaking at the Kgalema Motlanthe Foundation’s Inclusive Growth Forum last week, Mminele said there was already a “strong focus” on leveraging the $8.5bn to source additional funds from “other interested countries, development finance institutions, philanthropic capital and the broader private sector.”
The total estimated scale of the investment plan is more than R1-trillion over a five-year period, Mminele said.
The financing instruments used as part of the investment plan had to reflect SA’s own priorities, taking into account the need for fiscal sustainability, he said.
The related terms for any loans that form part of the funding package had to be more attractive than what could be secured in capital markets and they had to be granted “without unduly onerous reporting requirements”.
The investment plan (JETP-IP) is expected to be formally endorsed by all the partners at the COP27 climate negotiations in Egypt in November.
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