With ongoing energy constraints, the World Bank has urged SA to promote transparent policies to enable competition and encourage private investment into power generation to improve the financial viability of Eskom.
During a meeting finance minister Enoch Godongwana last week, World Bank president David Malpass said reducing greenhouse gas emissions is a difficult challenge globally, and particularly in SA given the high carbon intensity of the energy sector.
SA’s power sector contributes 41% of the country’s CO₂ emissions, according to the World Bank.
Malpass was on a short visit to SA on his way to the COP27 summit in Egypt. He visited the recently decommissioned Komati power station with public enterprises minister Pravin Gordhan on Sunday. They were met at the site by Eskom chair Mpho Makwana and CEO André de Ruyter.
“The WBG [World Bank Group] Country Climate and Development Report (CCDR) for SA prioritises the actions and investments needed to lower emissions in a socially sustainable manner while strengthening resilience to climate change,” said Malpass in a statement.
Malpass and Godongwana spoke about slow economic growth, rising inflation and interest rates facing developing countries. They also acknowledged that the ongoing energy crisis undermines SA’s growth potential.
Malpass recognised the progress SA has made in reducing its fiscal deficit and underscored the importance of maintaining both fiscal and debt sustainability. He affirmed the bank’s support for economic and structural reforms in the areas of fiscal management, quality infrastructure, a business-enabling regulatory framework and job creation.
On November 3, the World Bank approved $497m (R9.1bn) in financing to help SA lower its greenhouse gas emissions by decommissioning and repurposing the Komati coal-fired power plant in Mpumalanga using renewables and batteries.
This is part of efforts to replace SA’s carbon-dependent power supply with greener alternatives to reduce carbon emissions and improve air quality.
The World Bank has lent money to Eskom before, granting a controversial $3.75bn loan in 2010 to help finance the building of Medupi and of two renewable energy projects (one of which was never built).
Komati, between Middelburg and Bethal, is one of Eskom’s oldest power stations and its units are being gradually shut down as they reach the end of their useful lives. Komati was shut down on Monday after operating since 1961. The last one is due to shut next year.
Eskom plans to pilot it as a model for decommissioning old coal-fired stations and repurposing them to run on renewable energy or natural.
The repurposing of the plant will see the installation of a combination of 220MW renewable energy solutions, including 150MW solar PV and 70MW wind, and 150MW batteries,
The Komati Just Energy Transition Project is being financed through a $439.5m loan from the World Bank, a $47.5m concessional loan from the Canadian Clean Energy and Forest Climate Facility and a $10m grant from the Energy Sector Management Assistance Program.
Some of the money will be used to create economic opportunities for local communities and jobs in agriculture, local manufacturing and digital technology.
About 15,000 people will benefit in the form of community-driven projects, skills training, incubation support and business development services for new and existing micro, small, and medium enterprises. with Hilary Joffe
Update: November 6 2022
This article has been updated with new information throughout.
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