Billions for Eskom debt: This type of aid creates the obligation to establish a truly just energy dispensation

2 June 2022

The news agency Bloomberg reports that the United Kingdom (UK) is considering guaranteeing about R15,6 billion of Eskom's debt.

It could be very beneficial for the South African government seeing as the government is currently guaranteeing Eskom's debt.

The country's credit rating is, however, two points below investment grade, which drives up the cost of government debt and restricts its availability.

If this guarantee realises, it will form part of the support package of $8,6 billion (R134 418 billion) for a just energy transition, which America, the UK, Germany, France and the European Union (EU) promised during the COP26 climate summit.

Its aim is to alleviate the social challenges that relate to the phasing out of coal.

Although R15,62 billion is a large amount, it is dwarfed by Eskom's debt totalling R396 billion. It comprises just under four percent of the total.

Still, it would relieve some of the pressure on Eskom and the government so that carbon-neutral energy can start to make up a larger part of the country’s total energy mix. 

In the twentieth century, industrialisation was driven by large, centralised power generating plants using fossil fuels. But its time is as over as the time of draught animals was over about a century ago.

Smaller power plants are suggested as substitutes alongside solar and wind power as well as green hydrogen, which is joining the ranks of economically viable alternatives.

If the current power crisis can be resolved, the South African economy will stabilise for the most part.

Apart from the destruction caused by load shedding, record-high petrol and diesel prices are also causing serious damage. Ironically enough, the means of transport dependent on these fuels is also gradually becoming outdated technology. 

Everything seems to indicate that existing motor vehicles will be replaced by electric vehicles and heavy vehicles will get hydrogen-powered engines.

The great advantage of all of this is that all the energy can easily be generated and manufactured in South Africa. So, the country will no longer be affected by the volatile international energy market.

Naturally, communities that depend on the coal economy view these developments as a threat. Therefore, it is vital that the transition is made gradually.

Prospects include new job opportunities being created and that greater stability will strengthen the renewal process.

But before the favourable future can dawn, the current crisis must be overcome. Therefore, the possibility of a guarantee is welcomed even though it may not avert the crisis per se.

Issued by Wynand Boshoff, FF Plus MP and chief spokesperson: Mineral Resources and Energy, 2 June 2022