Why Eskom’s loan will end up costing SA dearly

2009-12-15 00:00

SOUTH AFRICAN consumers can expect to fork out more for electricity if the World Bank approves a R50 billion loan to state-owned power utility Eskom for its “new build” programme.

The loan has been touted as a way to reduce the size of the tariff increase Eskom needs.

While world leaders discuss global warming and climate change at the Climate Change Summit in Copenhagen, local environmental groups groundWork and Earthlife Africa met in Durban to discuss a report about the proposed multi-billion rand loan to help Eskom and South Africa’s electricity sector.

Both groups said the loan will do nothing to improve South Africa’s carbon emissions and energy poverty, which affects the country’s poorest.

According to the report, the new build programme is based on carbon-intensive coal-fired power and includes two giant coal-fired power stations — Medupi in Limpopo and Kusile in Mpumalanga.

Medupi and Kusile would cost R100 billion and R110 billion respectively.

David Hallows, the author of the World Bank and Eskom report, which was released simultaneously in Durban and Copenhagen yesterday, said that while the loan is still under discussion, it will drastically affect the average man who would pay higher electricity tariffs to repay the loan.

He said that it is worrying that the World Bank has not disclosed repayment terms and the interest rates of the loan, something he believes will affect all South Africans.

Hallows said that ultimately the loan will affect taxes on top of the 35% a year tariff increases that Eskom have requested from government already.

“The loan will only subsidise major users of electricity … it will do nothing for poverty alleviation in South Africa,” he said.

Tristan Taylor, project co-ordinator at Earthlife Africa, said he is concerned that the loan is not environmentally friendly as it would be used for a coal powered plant.

He said that it is “highly reckless” to build the Kusile plant.

“The loan will increase energy poverty as we will have to pay back the loan. This will cause more power disconnections among the poor and affect small businesses as well,” he said.

Bobby Peek from groundWork said the loan would do little in assisting the poor to get access to electricity.

He said that the loan would make electricity far more expensive and that the poor would have to resort to using paraffin and coal in their homes.

“This would cause health problems and will be dangerous. There’s no democracy in this. This loan is not good for South Africans who will end up paying a higher price for it,” he said.

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