Eskom’s World Bank loan is pro-poor and will reduce poverty, says the CEO of the NEPAD Agency

The NEPAD Planning and Coordinating Agency (NPCA / NEPAD Agency) said today in Midrand that it is in full support of a  World Bank (WB) loan application by Eskom which is critical in the South African State-owned Enterprises (SOE) decision to roll-out its ZAR385 million capital expansion programme.

 

The CEO of the Agency, Dr. Ibrahim Assane Mayaki, says the Eskom loan is “pro-poor”, and supports poverty reduction and regional integration in Africa, and the Southern African Development Community (SADC), in particular.

 

Africa’s development, according to the NEPAD Agency, rests on the continent’s ability to secure cheap energy sources in the long haul, to support development goals and poverty alleviation programmes.

 

 

The energy infrastructure deficit in Africa at the country-level stands at over US$40 billion annually, according to the recent Africa Infrastructure Country Diagnostic (AICD) study. This gap represents 65% of the annual capital expenditure needed by African countries, such as South Africa, to re-capitalize their energy infrastructure. The re-capitalization is usually channeled towards improving base load energy requirements and enhancing “rainy day” excess capacities.

 

The NEPAD Agency says the long term energy security of South Africa could guarantee the energy security of SADC, given the community’s strategy of energy trading and sharing of excess reserves amongst its member states.

 

“It makes sense therefore, to support the US$3.75 billion WB loan application by Eskom, because of its potential spillover effects of promoting sub-regional development and integration”, Dr. Mayaki said

 

The NEPAD Agency says the Eskom loan application should be viewed in terms of South Africa’s immediate need to support its industrial growth and employment strategies, and not necessarily in the context of “green” and “black”, that is to say,renewables and coal respectively.

 

The loan to South Africa, which includes a wind and concentrated solar renewable energy initiative, will give other African countries the opportunity to draw lessons and pilot similar green technology elsewhere, says the NEPAD Agency.

 

According to Government sources, South Africa is committed to reducing carbon emissions and rolling out renewable energy projects as well as reducing energy intensity and carbon sequestration.

 

Industry experts say Eskom’s balance-sheet, in the short to medium term, cannot support its capital expansion programme internally without major tariff increases. The loan will, therefore, help Eskom to avoid the consequent load shedding, power cuts, industrial contraction and unemployment that may result from lack of base load capacity to meet its energy requirements. 

 

The NEPAD Agency took note of the Bank’s assertion that Africa cannot pay for the research and development cost of substitute industries that an immediate adoption of clean energy technologies would require. 

 

“Africa cannot leap-frog to wind or concentrated solar renewable energy technologies, without judicious transformation from basic, to hybrid technologies such as low carbon energy components and green technologies,” the NEPAD Agency CEO said.

 

For more information please contact:

Andrew Kanyegirire – Communications at the NEPAD Agency

Email: andrewk@nepad.org 

Tel: +27 (0) 11 256 3600