Johnathan Paoli
THE EFF has strongly condemned the “just energy” loans from the World Bank, Germany, and the African Development Bank saying this was an attempt to entrap South Africa into a debt trap by the ANC, owing to their diminishing political power and control.
The department of Treasury announced on Tuesday that government signed loan agreements to the value of almost R34 billion with the World Bank, Government of Germany, and the African Development Bank (AfDB) for concessional financing to support the country’s Just Energy Transition in line with the Just Energy Transition Investment Plan (JET-IP).
The department said the loans provided by Germany’s Kreditanstalt für Wiederaufbau (KfW) and the AfDB follow their partnership with the World Bank on the second Development Policy Operation (DPO) to support South Africa’s commitment to the just transition for a low-carbon and resilient economy and are sovereign loans provided directly to the National Treasury for general budget expenditure purposes.
The Red Berets said despite being presented as below-market rate loans for a just energy transition, the reality was that these loans are meant to control and dictate South Africa’s politics and policy agenda once the ANC loses power.
The EFF said that none of these loans provided for the so-called ‘just energy’ transition were meant for additional generation capacity, but instead, that priority was given to building transmission and distribution networks suitable for the privatisation of generation.
The party further said that the loans undermined the autonomy of South African energy policies and impinged on the country’s ability to chart an independent course for sustainable development.
“It is essential to recognise that South Africa possesses the natural resources and human capital necessary to develop its energy sector independently. The reliance on foreign loans with hidden agendas only serves to perpetuate a cycle of dependency and compromises our national interests,” the party said.
The 15-year World Bank loan includes a five-year grace period and carries an interest rate based on the six-month Secured Overnight Financing Rate (SOFR), which currently stands at 5.32%, plus 0.95%.
The 12-year AfDB loan is priced at the six-month SOFR, plus 1.22%, with a two-year grace period.
The 12-year KfW loan, meanwhile, has been extended at a fixed 4.4% interest rate and also includes a three-year grace period.
In November last year, the French and German development banks, AFD and KfW respectively, extended €300-million apiece in support of the JET-IP; these were also extended in the form of policy loans to the National Treasury.
The announcement of the latest JET-IP-linked loans follows a reaffirmation by the International Partners Group (IPG) of its support of South Africa’s JET-IP.
The JET-IP is currently planned for the five-year period 2023-2027 and sets out the scale of need and the investments required to achieve the decarbonisation commitments in the country’s Nationally Determined Contribution which outlines the rate at which South Africa plans to reduce greenhouse gas emissions and represents the country’s fair contribution to the goals of the Paris Agreement.
INSIDE POLITICS
