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Finance Minister Enoch Godongwana says “old technologies”, like gas and nuclear, can provide SA with reliable electricity.

GCIS

• Finance Minister Enoch Godongwana says government’s commitment to take on between a third and two-thirds of Eskom’s R400 billion debt will come with conditions.
• This will include an investment in “old reliable technologies” like nuclear and gas.
• Godongwana defended minerals minister Gwede Mantashe against a “massive attack” from renewable energy lobbies.
• For more stories, go to the News24 Business front page.

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Finance Minister Enoch Godongwana says government’s commitment to take on between a third and two-thirds of Eskom’s R400 billion debt will come with conditions – including that the utility invests in gas and nuclear power.

On Monday, he addressed the South African Chamber of Commerce and Industry (Sacci), saying that South Africa needs more reliable power sources, gas and nuclear included.

On the sidelines of the event, he said that Treasury’s agreement to take on some of Eskom’s debt comes with certain conditions, which include bringing these “old reliable technologies” into SA’s energy mix.

“When I’m saying I’m going to take the debt, I’m going to have conditions precedent, which will make sure that Eskom makes certain undertakings before I take the debt,” he said.

In the medium-term budget policy statement, government said it planned to take over up to two-thirds of the utility’s R400 billion debt. It is still in talks with Eskom’s lenders about how this debt transfer will work.

The transfer will be tied to strict conditions, including the unbundling of Eskom into three entities, as well as the more stringent management of its costs and addressing bad debts. On Monday, Godongwana also confirmed that investment in new electricity generation may also be part of these conditions.

READ | Size of Eskom bailout not yet clear – Treasury

Between a rock and a hard place

Godongwana said the government has no choice but to take on the power utility’s debt.

The amount of guarantees it has given Eskom has created a severe risk to the country’s sovereign credit ratings. If it defaults, it’s not just the utility that will suffer but the whole country. So, a better way to reduce that risk was to take on the debt.

“I don’t have a choice. I’m between a rock and a hard place. If Eskom defaults, I’ve provided guarantees to Eskom of almost R350 billion,” said Godongwana.

At the same time, the minister pointed out that while so much money has been pumped into Eskom and continues to be, SA has not fixed the problem of connecting power to the grid. It has had the regulations to allow renewables into the system since 2010, but 12 years later, load shedding has become worse.

Part of that has to do with the government’s start-and-stop stance towards the Renewable Energy Independent Power Producer Procurement Programme (REIPPP). The government delayed signing power purchase agreements with independent power producers (IPPs) in 2016 and only finalised that in 2018.

In 2021, SA announced 25 wind and solar projects that were supposed to add almost 2 600 megawatts to the national grid. They’ve also faced delays. Now the government has extended that bid window to 56 projects that should bring 5 200MW of renewable energy capacity to the grid. Everything is still stuck in the bidding phase. Meanwhile, statistics cited by Godongwana estimate that power constraints contribute 40% to the country’s economic underperformance.

‘Attacked’ by lobby groups

But Godongwana believes the problem lies beyond these renewable energy project delays, saying there are “old technologies” that can provide SA with reliable electricity. These include “some nuclear”  and “some gas”.

“Any mention of those is attacked by the green energy groups and the environmentalists,” he said, pointing out that SA’s integrated resource plan of 2019 spoke about all those and was accepted as the country’s energy policy.

“We need to focus on fixing power to the grid,” added Godongwana.

He said Mantashe needs to take “bold enough” decisions to get SA to a point where it can achieve reliable electricity supply. Godongwana said that while renewable energies lobbyists are “mounting a massive attack on Minister Mantashe”, countries like Germany are saying they’d rather burn coal than freeze in the dark.

Godongwana said he wasn’t a proponent of dirty energies or a coal dinosaur, but SA needs electricity now.

“In South Africa, we prefer to freeze in the dark than burn coal,” he said.