Some of the loans South Africa secured as part of an $8.5 billion climate finance package will cost a fraction of what it would have paid commercial lenders and will cut the country’s future borrowing costs, Finance Minister Enoch Godongwana said.
If it hadn’t had the loans at preferential rates South Africa would have had to raise the money at market rates, he said. The bulk of the climate funding will be used to bolster electricity production as state utility Eskom plans to close many of its dilapidated coal-fired power plants in coming years.
The quantum of aid will in part hinge on the tariff increases Eskom is allowed by the energy regulator and its strategy to replace old power stations, Godongwana said.We need to finalise how much of Eskom’s debt we are going take, and over what period are we going to take on the debt.