South Africa is on track to receive US$8.5 billion in debt guarantees from the world’s richest countries that could help it scale back its reliance on coal-fired electricity.
“The guarantees would enable South Africa or companies such as state power utility Eskom Holdings SOC Ltd. to borrow money needed to close down coal-fired power plants and enable the generation of renewable energy,” Bloomberg reports, citing sources close to the negotiations. “Such an arrangement would alleviate pressure on the South African government to guarantee any debt Eskom may need to fund its transition to renewable energy.”
The guarantees, first announced at last year’s COP 26 climate summit in Glasgow, are being funded by the United States, the United Kingdom, Germany, France, and the European Union, and could run three to five years, Bloomberg says. As of March, the South African government had already issued loan guarantees worth ZAR560.1 billion (US$35 billion) to state-owned enterprises, with Eskom accounting for 79% of the total.