South Africa’s dirty secret: Eskom and the Medupi power plant http://www.pambazuka.org/en/category/features/64410

Yet Eskom’s US$50 billion plan – developed not only to provide South Africa with energy, but the extractive industries in client states located across sub-Saharan Africa, from Mozambique and Lesotho, to Namibia, Botswana, Swaziland and Zimbabwe, prefers another source of power: Coal. The World Bank has thrown its weight behind the star of the show: Medupi, a 4,800 MW coal-fired power station, extending US$3.75 billion to the government.

On the surface, it is cheap capital: A 0.5 per cent fixed margin (and a variable of 0.24 per cent), coupled with a seven-year grace period and 28 years in which to service the debt.But the loan will have to be financed in hard currency, further export-orienting the country as source of cheap primary commodities. Medupi is also estimated to generate more C02 than 115 developing countries i.e. 25 million tonnes each year, drawing water from three already strained major water catchment areas: the Vaal, Orange and Limpopo river systems, in addition to the creation of 40 new coal mines.

Eskom’s former CEO, Jacob Maroga, recently revealed in court that iron-clad ‘sweetheart deals’ inherited from South Africa’s apartheid era could not be renegotiated as the cost of ‘buying back power’ from foreign-owned multinationals such as smelter BHP Billiton was ‘prohibitive’ i.e.: R5.9 trillion or US$800 billion. The hands of the state, Maroga claimed, were tied.

Some 38 corporate entities including Anglo American, Alcan and BHP Billiton, consuming 40 per cent of power generated at $0.05 US cents per kWh – the cheapest in the world, will be subsidised once again as Eskom imposed 25 per cent tariff hikes on citizens – utilising just 5–10 per cent of national power, tripling the cost of access from US$50 to US$120 per month during a three-year period, with Eskom vying to increase tariffs by 35 per cent per annum, receiving approval for 24 per cent.