Newly appointed finance minister Tito Mboweni’s maiden speech in the current ‘technical recession’ will be a task to keep the country from succumbing to mounting pressure on the economy.
350Africa.org is calling on the new finance minister to re-examine budget forecasts in Wednesday’s speech, and urge the Development Bank of Southern Africa (DBSA) to commit to not financing the proposed coal power plants.
Inclusion of new coal in the 2018 draft IRP will cost South Africa nearly R20 billion, according to the Energy Research Centre (ERC). This is said to be more than the country needs to spend on energy infrastructure and will make electricity more expensive for all South Africans – since the costs will be passed on to consumers.
Ahmed Mokgopo, 350Africa.org’s Divestment campaigner, said: “The country does not need new coal. We need public finance institutions like DBSA which invest public money into development projects to commit to not putting their money into dirty energy that will come at a great cost for South Africans. The DBSA and other development banks should take their cue from the World Bank which recently announced their decision not to finance a coal plant in Kosovo.”
Climate change and environmental issues are putting constraints on South Africa’s economic growth, says 350Africa.org. Eskom, a coal intensive giant, is the biggest risk to the country’s economy, according to Goldman Sachs.
“As a progressive force and development economist in Ramaphosa’s cabinet, Mr Mboweni cannot ignore the challenges posed by government’s approach to sideline issues of people’s health, the environment and climate change.”
350Africa.org said it commissioned a comparative study into the financial cost burden of the IPP’s against the 2018 national budget on Social Development. A key finding showed that the additional costs of the coal Independent Power Producers (IPPs), when set against the Department of Basic Educations School Infrastructure Backlogs budget, could be allocated to eradicate dangerous school buildings, provide sanitation and decentralised electricity to schools. This budget was cut by R 3.6 billion over the next three years. R19.68 billion rand, the standard reference scenario used in the study, could be allocated to eradicate pit latrines (a legal requirement since 2016) and replace unsafe school buildings and electrify schools without electricity.
“South Africa has become a prime destination for renewable and decentralised energy investments, this has been largely driven by the Renewable Energy Independent Power Producer Procurement Programme (REIPPP). The latest bid round of the REIPPP, announced in April 2018, has resulted in R56 billion in FDI for the production of 2300 MW of renewable energy via solar PV and CSP, wind and biomass to be added to the grid over the next five years. This is a huge milestone not only for the renewable energy sector, but also a good indication of investor confidence following years of uncertainty regarding management of the economy,” according to 350Africa.