[imagesource: Waldo Swiegers/Bloomberg]

In case you didn’t know, it’s a right old mess over at Eskom.

Years of crippling mismanagement have all but sunk the country’s power provider, and we are still hovering on the brink of load shedding.

You would have to be a brave person to take on the role of Eskom CEO, which has proven to be a poisoned chalice, but perhaps the future of the ailing SOE actually depends on green energy.

Here’s Moneyweb:

A plan to establish the world’s largest green-energy financing initiative is being threshed out in South Africa, which needs to reduce its environmental footprint and find innovative ways to fund debt-stricken state power utility Eskom.

The plan being formulated by Meridian Economics, a Cape Town-based think tank, is under consideration by the government. It envisions the establishment of an $11 billion (R161.1 billion) facility backed by development finance institutions and private funders.

The new entity would lend money to Eskom at slightly below commercial rates on condition it accelerates the closure of polluting coal plants to make way for renewable energy.

Eskom gets lent money at a reduced interest rate, and our nation’s energy gets cleaner – sounds like a win-win.

Let’s just keep Gwede ‘I can’t tell an April Fools’ joke from real news’ Mantashe well away from this one, please.

We are actually the world’s 14th largest producer of greenhouse gases, and the new initiative would drastically reduce our carbon dioxide emissions:

“This would be the largest and most significant global climate finance transaction to date,” Emily Tyler, a climate economist at Meridian, said in an interview. “It would propel South Africa to a cleaner and more resilient energy future.”

Eskom supplies about 95% of South Africa’s power and has turned to the government for aid to remain solvent after amassing R450 billion of debt. Under the plan, it would secure loans in tranches from the new facility over five years and have to repay them over 20 years. The money would be used to wean Eskom off bailouts and cover its future financing needs, rather than fund new and already self-sustaining green energy projects.

Here’s where I foresee one of the major stumbling blocks – the entire project is contingent on the plan to break Eskom up into those three separate units (generation, transmission and distribution), as well as some clever reorganising of the company’s debt.

The first of those conditions has been met with much opposition from labour unions, who worry about job losses, and the second of those conditions requires shrewd thinking.

Still, even if plans are at an early stage, it could be a step in the right direction:

Several large development finance institutions, climate funds and philanthropic organisations have expressed initial interest in participating in the initiative, Tyler said, without identifying them.

Discussions on the green funding proposals are at an early stage and it would be premature to comment on them at this stage, said Ismail Momoniat, a deputy director-general at the Treasury, which is assessing the plan.

Given that the South African government agreed, in 2009, to reduce emissions by 42% by 2025, and we have thus far made little to no progress, time isn’t on our side.

Add the SOE’s current debt, and you have a problem that really does need some kind of effective solution before the walls cave in.

[source:moneyweb]