||LET'S review this incredibly revealing controversy about climate,
electricity and South African fealty to global finance.
The World Bank proposes a $3.75 billion (R27.5bn) loan to Eskom. If
approved by the bank's board next week, most of the money ($3.1bn) will
fund construction of the world's fourth largest coal‑fired power plant,
Medupi, which in turn requires a 127 percent real price increase for
ordinary residential consumers, while the world's biggest metals and
mining houses still get the world's cheapest electricity.
Eskom is, as a result, suffering intense criticism, and South Africa
will probably soon witness a national strike threatened by the trade
unions against price increases required to pay the loan and other
More than 200 civil society groups across the world have endorsed the
critique originating from local activists, who launched the campaign on
February 16 with a spirited protest at Eskom's main Durban branch office
South Durban has been an epicentre of protest against fossil fuels,
given that our neighbours include the largest, least responsible
petro‑chemical firms south of the Niger Delta. Longer‑term oil and coal
damage to residents' health and welfare catalysed community‑based
climate hearings sponsored by Oxfam UK last August.
With electricity prices soaring, many more residents in south Durban are
being disconnected. They often reconnect illegally, and as Eskom and our
municipality clamp down, the result is more social strife, in a country
with what is probably the world's highest rate of community protest.
To illustrate the dangers three months before the World Cup begins, last
weekend a police Casspir was caught in a cleverly disguised spiked trap
designed by Mpumalanga protesters from the township of Ogies.
They set it ablaze, fortunately with no deaths.
In Limpopo and Mpumalanga, anger at Eskom will also rise because of
eco‑social threats in the vicinity of Medupi and the dozens of new coal
mines that will feed it. Local ecologies will be adversely affected,
especially the notoriously degraded water table, as well as the air,
land, vegetables and animals because of mercury emissions from coal.
The World Bank failed on due diligence, relying on national air quality
regulations which remain weak because of the minerals industry's power.
Indeed the point of this loan is not to provide more power to poor
people, who will now not be able to afford electricity (and in any case
they consume less than 5 percent of the national supply). Instead,
Medupi is being built so as to maintain electricity supplies costing
less than R0.14/kWh to Anglo American Corporation, BHP Billiton,
Arceleor Mittal and other multinationals.
These companies' smelters use the most power, thanks to apartheid‑era
special pricing agreements that Eskom still keeps secret, yet there
are very few jobs and economic linkages because locally sold steel and
aluminum cost far more than the same products which the smelters send
abroad. Also sent abroad are vast profits from these operations,
contributing to the country's severe payments deficits.
As if these reasons are not enough, Eskom's privatisation of 30 percent
of generating capacity is explicitly advanced in the loan, leading to
opposition from trade unions and consumers.
Moreover, the borrower is not creditworthy. Eskom lost R9.7bn in its
last financial year due to hedge‑investment gambles on the special
pricing agreements and, amidst the chaos, the company's chairman and CEO
were ditched. However, instead of reviewing planning by former CEO Jacob
Maroga (whom Eskom itself is now attacking in court as so incompetent as
to justify dismissal), the new Eskom leadership is proceeding with
business as usual.
Corruption is rife, too, as one might expect when the cost of the new
power plants escalated by a factor of three. Contrary to supposed
anti‑corruption policies, the Bank loan will directly fund ANC party
coffers, because the power plant will be built with Hitachi boilers that
in turn kick back an estimated R5bn thanks to a convenient ‑ and utterly
dubious (everyone admits) ‑ ANC investment in Hitachi.
Leaders of the corruption‑riddled ruling party are themselves ashamed
about the obvious conflict of interest, but ANC treasurer Matthews Phosa
broke a promise made two years ago to sell its shares in Hitachi. Last
week revelations that then Eskom chairman Valli Moosa acted improperly
given his conflict of interest as an ANC finance committee member,
should kill the loan, were the World Bank concerned about reversing its
long history of promoting corrupt regimes.
Finally, to understand why opposition to a loan is so strong requires a
sense of racial justice. The World Bank's history of financing apartheid
(just three years after the 1948 election of the Nationalist Party)
included $100 million for Eskom from 1951‑67.
During that period, the World Bank's money financed electricity to
exactly zero black households, yet like many others which profited from
apartheid‑era investments and are now facing Alien Tort Claims Act
lawsuits in the New York courts, the bank has ignored calls for
If the Bank makes the loan on April 8, South African activists will call
for the revival of the World Bank bonds boycott, to take away the
institution's institutional investors, and will lobby for rejection of
the Bank's requested $180'bn recapitalisation.
The bonds boycott was launched by a group including the late South
African poet Dennis Brutus and Soweto electricity crisis committee
chairman Trevor Ngwane just prior to the protest of 30 000 against the
Bank's Spring meetings in April, 2000. Within weeks, the cities of San
Francisco, Berkeley, Oakland, Cambridge and Boulder, as well as socially
responsible investors like the Calvert Group and the world's largest
pension fund (TIAA‑CREF), had made a commitment not to buy bank bonds.
South Africans and their allies are approaching these same institutions
in coming weeks to relaunch the bonds boycott, and to oppose
With scores of organisations across Africa already on board this
campaign, the next step beyond the World Bank protest will be to demand
that South Africa confront its own climate debt to the continent.
The Climate Justice movement's demand is simple: in addition to paying
back Africa for the damage being done by climate change by an economy
that takes far more than its fair share of greenhouse gas emissions
space, South Africa must not be allowed to fall deeper into both
financial debt to the West ($75bn) and climate debt to Africa.
# The authors are South Durban residents: Bond is University of
KwaZulu‑Natal Centre for Civil Society director and D'Sa leader of the
Community Environmental Alliance.