Johannesburg – There is nothing “malicious” behind the hold on the New Development Bank’s (NDB's) R2.8bn loan to Eskom, said Finance Minister Malusi Gigaba.
He was speaking to reporters following the launch of the African Regional Centre of the NDB, also known as the Brics bank, on Thursday. The Johannesburg centre is the Brics bank's first regional centre. Its headquarters is in Shanghai, China.
During a press briefing, Gigaba clarified why the loan to Eskom was put on hold.
Business Day reported that the NDB was freezing a R2.8bn loan made to Eskom in April 2016, which is intended for renewable energy projects. But Eskom has not taken on new renewable energy agreements as former acting CEO Matshela Koko said that renewables were not cost-effective.
“There is an ongoing discussion between government, Eskom and the NDB with regard to the loan provided to Eskom.
“It was earmarked for green energy and that earmarked funding could not be used for anything other than that,” he said.
Gigaba said that the 14 point plan to reinvigorate the economy highlighted that Eskom had faced challenges, among these that the demand for electricity has dropped due to low economic growth.
Eskom has improved the generation capacity of its power stations - in effect, it has a surplus of 5 700 MW. This is bigger than the generation capacity of any single power station including Medupi and Kusile, he said. Transmission lines had to be built to transfer the excess energy to neighbouring countries.
There were also other challenges such as government guarantees. Eskom could not afford to purchase renewable energy it was not going to use, said Gigaba.
“This loan could be called on in the future and used again for green energy when the economy picks up, and the demand for electricity picks up.”
Gigaba said that it is important in terms of the Integrated Resource Plan of 2010 to invest in renewable energy to reduce carbon emissions.
“This is not something that is malicious or has other insinuations. It is really because funding is earmarked for green energy.” He used an example of Transnet borrowing for rail infrastructure and then later asking for the funding to be used to buy locomotives instead. “It does not work that way,” he said.
He said that funding will be sought from the NDB from other projects.
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