Green fund could save Eskom| With debt level reportedly nearing R500 billion, the aim is to unlock between R150 billion & R200 billion from climate change mitigation funding, in return for Eskom accelerating its shift away from coal-based power generation
A unique financing vehicle, based on reducing carbon emissions, is being developed by the Eskom sustainability task team – appointed by President Cyril Ramaphosa last year – in order to raise up to R200 billion to save the utility from its debt spiral.
This would reduce carbon emissions in South Africa’s power sector, which is one of the most carbon-intensive in the world. Eskom is deep into “junk” status, or subinvestment grade, and is unable to raise any further money through commercial financing because of its debt-to-revenue ratio. But, said Steyn, a moderate acceleration of the decarbonisation programme will yield substantial results given South Africa’s carbon-intensive economy. He could not divulge further details of the funding vehicle because the model is still being developed.
The average interest rate Eskom is paying on its debt could not be determined, but Steyn said the last sale on the international bond market was at about 14%. “Carbon capture and storage, underground coal gasification, coal to liquids and other clean coal technologies are critical considerations that will enable us to continue using our coal resources in an environmentally responsible way,” said Radebe.
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