SA faces power cuts without loan
South Africa may need to enforce power cuts or raise electricity prices further if a disputed $3.75bn loan from the World Bank is not approved, according to a senior government official
South Africa may need to enforce power cuts or raise electricity prices further if a disputed $3.75bn loan from the World Bank is not approved, according to a senior government official
The US and Britain have threatened to withhold support for the loan for a coal-fired plant in South Africa, expanding the battleground in the global debate over who should pay for clean energy.
“If they say no, we will either increase the tariffs or we will face serious blackouts,” Director General at the Ministry of Energy Nelisiwe Magubane told reporters in an interview.
South Africa’s state-owned utility Eskom is seeking the loan, intended to help expand power generation capacity to meet fast-rising demand in Africa’s biggest economy.
Eskom failed to get the 35 percent annual tariff rises it wanted this year, but the regulator still approved hikes of around 25 percent each year for the next three years, stoking inflation fears and anger from unions, businesses and consumers.
Eskom was forced to step up investment after power cuts paralysed the critical mining industry in early 2008.
Magubane said she was surprised by the apparent opposition from the US and Britain to the loan, particularly given that South Africa had not been asked to provide an alternative to coal in its application.
She said South Africa, reliant on coal for 95 percent of its electricity needs, had shown sufficient proof of plans to cap emissions and reduce them after 2030. She said the target could be met even with Medupi and another coal-fired plant because less efficient old power stations would be retired.
Renewables
Some $700m of the requested loan would go for investments in renewable energy, she said.
In addition, the World Bank’s Clean Technology Fund has already approved a loan of $500m for South Africa’s clean energy projects, also to help fund privately-led initiatives.
She said the government was revising its current target for renewable power to a “more aggressive” one.
Should the World Bank loan be approved, she said South Africa would seek to speed up Medupi to bring it back to its original schedule of having the first turbine commissioned by April 2012.
But the second planned power plant Kusile, which like Medupi is expected to supply 4,800 MW, is likely to remain delayed.
She said the government was discussing alternative means to help fund Eskom, which reported a 9.7 billion rand ($1.31bn) loss for its last financial year. Part privatisation and further government guarantees are still options.
Although Magubane said there was no alternative to coal for now, she saw nuclear power playing a critical role in the future, with the next new plant in operation by 2022 at the latest.
