Worries over South Africa’s R200 billion energy deal

 ·19 Feb 2024

The multi-billion dollar investment into South Africa’s transition to renewable energies is hardly off the ground and already facing criticism from civil society.

A year after its announcement, in late 2022, several developed nations, including Germany, the US, the UK and France, pledged $8.5 billion (R160 billion) for the Just Energy Transition (JET) Partnership.

This funding is aimed to help South Africa boost its energy supply through renewables and decommission its coal-fired power stations.

This has since grown to $11 billion (R207 billion) after Spain, Denmark, and the Netherlands provided additional funding during 2023.

South Africa faces tremendous risks from global warming due to the nation’s water scarcity and ecology. However, the economy is still highly dependent on coal and other fossil fuels, making the transition to renewables costly.

Since its announcement, very little information has been publicly shared, particularly how the funding would be structured and deployed.

The government has since uploaded a “JET Implementation Plan (IP) Grant Mapping Register”, which shows that billions of funds have already been spent, allocated or pledged, with many of it released before the publishing of an investment plan.

R10 billion has already been allocated to 145 projects, which Just Share’s Executive Director Tracey Davies says shows that “we were all dopes from the start.”

When the project was announced in November 2022, 80 of the 145 projects worth over R5.3 billion had already started. The end dates for 26 of these projects were before the cabinet formally approved the JET IP in November 2023.

“A lack of transparency around the JETP threatens to quickly erode public trust in the entire project,” Davies said.

“While there may indeed be worthy recipients of the funding allocated so far, the register raises two crucial initial questions. First, how are the recipients selected? Second, what criteria are used to assess whether a project will contribute to the JET?”

Firstly, the JET Project Management Unit within the presidency does not have a website, and there is no understanding of who works there, Davies said.

“There is also no public application process for JETP funding and no public information about how recipients are chosen.”

Although the JET IP states that a matchmaking mechanism between funds and beneficiaries will be created, hundreds of millions have already been disbursed to an array of “implementing entities”, including universities, consultants and more.

“(Secondly), while the JET IP identifies key focus areas for the use of grant funding, it is hard to understand, without transparency around selection, how and when this myriad of diverse, disconnected projects will converge in achieving accelerated decarbonisation and justice for affected communities,” she said.

“This is particularly concerning when looking at funds deployed to recipients in the private sector, such as an American event management firm, which received R16.6 million to organise green hydrogen industry workshops or the R626 million for green fuel projects where Sasol is a joint implementing partner.”

“There is also an allocation of R35 million to municipal support projects, which includes reference to the Musina-Makhado Special Economic Zone, a Chinese-backed, coal-fuelled mega-industrial project described by environmental justice groups as ‘Limpopo’s climate bomb’.”

Not all lost

Despite the lack of transparency, the R10 billion deployed is only a fraction of the over R200 billion, and there is still time to gain credibility.

Davies said that the JET Project Management Units, donors, and project recipients must ensure that there is publicly available information on the past selection processes and the outcomes of completed projects. Until this is done and the funding platform is operational, no new grants should be allocated.

“Most importantly, there must be regular public feedback on how projects are tangibly benefiting the workers and communities in whose name the JETP has been promoted.”

“Without that, it will lose all legitimacy and be viewed by millions of disillusioned citizens as yet another mechanism for enriching consultants and the well-connected.”

The JET IP 2023–2027 and the JET Implementation Plan Grant Mapping Register can be found below:

Read: Warning over South Africa’s R500 billion ‘money pot’

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