Eskom turns to private capital as global funding for energy transition falls short

While Eskom is making operational headway, global funding for its shift away from coal continues to be a challenge.    

Electricity and Energy Minister Kgosientsho Ramokgopa has joined a delegation of ministers in Davos for the World Economic Forum to present the country’s progress, reform momentum, and investment opportunities. 

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Eskom has faced challenges securing funding for its Just Energy Transition (JET).

A pledge of more than R213 billion by major Western powers was rejected due to unfavourable terms.

Ramokgopa said Eskom will need to turn to other, more affordable, funding options, such as banks, private investors, and the bond market.

“The point has always been that South Africa will determine the pace and scale of that transition.

“Eskom has a duty to ensure that whatever money they access, it should be capital that is affordable. At the end, you and I are going to pay for the cost of capital because it is going to find expression in the tariff configuration,” he says.

Ramokgopa is also expected to meet with Glencore CEO Gary Nagle in Davos to explore solutions for South Africa’s smelter industry.

The industry is one of the biggest electricity users, but is struggling due to high electricity prices.

The minister said it is working on a solution that aims to bring down the cost of coal, which accounts for about 40% of the cost of electricity.

He emphasised the importance of finding a solution that balances the interests of all stakeholders, including the government, industry, and workers.

“That cost cannot be socialised; it must be carried by these interventions, otherwise we will fix one area and create pressure for the South African economy and households.”

To listen to Ramokgopa in conversation with 702’s Bongani Bingwa, use the audio player below: