Analyst Patrick Bond says Eskom's bid for the loan comes "at a time of intense controversy surrounding Eskom's mismanagement. In its last annual reporting period, the company lost R9.7 billion, mainly due to miscalculations associated with hedging aluminium prices and the South African currency. Both the chair and chief executive officer lost their jobs late last year amidst unprecedented acrimony." Moreover, Bond said, "Eskom's continuation of inexpensive prices to several large export-oriented metals or mining multinational corporations, headquartered abroad, and offering the world's cheapest electricity, [is] heavily subsidised by all other mainly poor users in South Africa."
He refers to Nersa, National Energy Regulator of South Africa, recently tapping ordinary South Africans for power rate increases of 25 percent for each of the next three years.
Gordhan assures the public that the "rest of the loan, $745 million, will be invested in wind and concentrated solar power projects, each generating 100 megawatts, and in various efficiency improvements." He avoids the government's 2003 White Paper that states that, by 2013, four percent of electricity 4,700 MW based on Eskom's projected electricity consumption must come from renewable energy. Eskom's three-year plan unveiled after Nersa's country-wide community meetings in January states that only 400 MW will come from such sources.
Gordhan concedes the loan "faces stiff opposition." Civil society around the world reminds him that Medupi adds an estimated 25 million metric tons of CO2 emissions per year to Eskom's 40 percent share of South Africa's overall total greenhouse gas emissions. There is also the real possibility that, if South Africa's currency crashes again as it has five times since 1996, repayment in US dollars is more expensive than in South African rands.
The South African government can afford the luxury of R8.4 billion to construct five new stadia and refurbish five others for the 2010 FIFA World Cup. There are further, yet undisclosed, costs to improve public transport, implement special safety measures for tourists' security, and "beautify" (by hiding or removing tens of thousands of shack dwellers). Why can't it afford to clean up environmental degradation that results from generating electricity?
The US is the largest World Bank funder. Send a powerful signal to climate change horseman Obama and Treasury Secretary Timothy Geithner to intervene. Then buckle up for a wild ride along the unexplored path of real energy sustainability. In the long run it affords more security than tripping down the World Bank's yellow brick road of business as usual.
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