just energy

Busisiwe Mavuso| International donors reflect impatience with pace of SA’s JET

POSTED ON: February 10, 2023 IN by Admin
just energy just energy

By Busisiwe Mavuso

While some fear it is now “up in the air”, it’s important to emphasise that SA’s energy transition is inevitable and is progressing in certain areas.

Is South Africa’s just energy transition investment plan (JET-IP) on track?

The recently announced departure of the head of the president’s climate finance task team, Daniel Mminele, on the expiration of his contract follows those of Eskom CEO André de Ruyter and the GM of the power utility’s Just Energy Transition Office, Mandy Rambharos. The Eskom team had been instrumental in drafting the country’s original just energy transition plan while Mninele developed the funding terms for the $8.5bn secured at COP26 in Glasgow in 2021.

None of their permanent successors have been named and international donors have started reflecting impatience, which raises questions about the country’s commitment to its transition, particularly given ANC’s internal disagreements around renewable energy, continued support in the party for fossil fuel and scepticism around the cost of a just energy transition.

While some fear it is now “up in the air”, it’s important to emphasise that SA’s energy transition is inevitable and is progressing in certain areas. Eskom’s decommissioning of the Komati power station, which was at end-of-life, is an example. Eskom developed, with international funding support, a holistic programme including repurposing the plant to produce 370MW of renewable energy and reskilling or transferring workers to other plants so that there are no job losses. Plans are also well under way for similar repurposing of the Camden, Hendrina, Arnot and Grootvlei power stations.

But political obstacles, including senior government officials who are not fully committed to the transition, are concerning as is the lack of transparency around the process. In the meantime, Vietnam and Indonesia have secured similar packages of financial support from international donors, having used SA’s plan as a model.

Private sector participation is a core element of all three packages – it makes up about half of Vietnam’s and Indonesia’s packages worth $15.5bn and $7.75bn respectively. For SA’s just energy transition, the World Bank has estimated that we need a total of about R8.5-trillion and the $8.5bn pledged in Glasgow is but a fraction of that.

But already, loans have been advanced to drive the success of the JETP, with both France and Germany signing lending agreements for each to extend €300m in concessional financing to our country. The terms of these loans are substantially more generous than what our government would be able to raise in capital markets.

South Africa has been providing global leadership with the JET-IP being the first of its kind on which other countries have modelled their plans, and with the Komati Repowering and Repurposing project, which Eskom described as one of the largest coal-fired power plant decommissioning, repowering and repurposing projects globally and will serve as a global reference on how to transition fossil-fuel assets.

It is encouraging to note how supportive the private sector has been of the JETP with companies in our mining sector already committed to net-zero targets while converting to renewable energy such as wind and solar, and in due course, hydrogen, not to mention substantial investments in resources needed to power the green transition including lithium, cobalt, manganese and rare earth minerals. Last October, Minerals Council South Africa CEO Roger Baxter told the 2022 Joburg Indaba that the mining industry had plans for 89 renewable energy projects, which were being implemented by 29 mining companies, accounting for about 6.5GW of electricity.

South Africa is one of the world’s extremely carbon-intensive economies and business needs to play its part in making the JETP succeed – if it doesn’t local companies will feel the negative effects import restrictions from its trading partners. But the private sector needs to be brought on board with full transparency over the opportunities available.

*Busisiwe Mavuso (@BusiMavuso2) is the CEO of BLSA. This article first appeared in News24 Business.

Have your say.
Share your opinion