Debt for climate opportunities in South Africa
South Africa’s economy, which was already in a precarious state before Covid-2019, has been tipped into full blown crisis by the pandemic. Gross na-tional government debt is expected to be upwards of 86% within two years. Eskom, which is the country’s state-owned monopolistic and vertically integrated electricity utili-ty, is a key driver of this escalating debt profile and lies at the heart of the economy’s structural challenges.
Eskom is facing unprecedented financial, operational, and technological challenges, including: a failing coal fleet (which generates 85% of its electricity); a carbon and local pollutant profile that is rapidly becoming intolerable to society; revenue shortfalls and the early stages of a utility death spiral; together with a ballooning debt burden of R480 billion (US$27.9bn). Eskom’s debt will be immediately unserviceable. Simultaneously, South Africa has a significant and immediate opportunity to pivot its carbon-intensive power sector towards low-carbon energy. Most of South Africa’s coal mining and pow-er-related activities are concentrated in Mpumalanga province, which hosts. This has a severe impact on air quality and the health of local populations. Only an ambitious rollout of renewables creates the foundation for a just transition that enhances the local environmental and health benefits of phasing out coal-fired power.
