Godongwana ‘misunderstood’ on coal comments, says he supports Just Energy Transition

Finance Minister Enoch Godongwana addresses Parliament last week.

Finance Minister Enoch Godongwana has withdrawn comments that Eskom should build more fossil fuel capacity.
Godongwana says he was misunderstood.
He was making an argument to explain that not fossil fuels and nuclear energy would not be phased out immediately.
For more financial news, go to the News24 Business front page.

Finance Minister Enoch Godongwana says he was misunderstood on Monday when he was quoted saying that the conditions under which government would take over Eskom’s debt were linked to the power utility building new coal, gas and nuclear plants.

In a statement issued on Thursday, the National Treasury said:

This is untrue and a misunderstanding of the argument the Minister was making. Minister Godongwana’s point was that SA’s energy transition will not be an immediate and wholesale abandonment of the country’s existing electricity sources, but a phasing-out of fossil fuels that may also involve transitional measures to maintain current coal and nuclear plants, and also the use of transitional sources like gas.

Godongwana’s comments came on the eve of the global climate conference COP27, at which SA and its international partners in the Just Energy Transition Partnership (JETP) are preparing to unveil the first phase of an investment plan to move towards cleaner energy. The US, UK, EU, France and Germany are supporting a package of $8.5 billion (R154 billion) in grants and loans, on the grounds that SA makes an accelerated transition away from coal-fired power.

“Minister Godongwana is fully committed to the government’s Just Energy Transition framework and the balance it envisions of accelerating investment in new generation capacity while protecting the communities that will be worst-affected by the move away from coal and other fossil fuels,” said the statement.

“His point was that the fundamental purpose of the National Treasury’s plan to take over a portion of Eskom’s debt is to allow the utility to focus on and invest in increasing its generation capacity.”

Interviewed on Monday at an event hosted by the SA Chamber of Commerce and Industry, Godongwana said: “There must be conditions precedent to make sure that Eskom makes certain undertakings before I take the full debt.”

Asked by News24 if this included additional “reliable energy such as gas and nuclear”, he replied “yes”. In comments to Netwerk24, he said that this included coal.

READ | Eskom debt takeover: Godongwana says gas, nuclear will be part of conditions

Godongwana’s comments, in apparent support of new fossil fuel investment, generated huge concern, in the context of a government that is often ambiguous on its position on fossil fuels, particularly coal.

While the government made commitments to an accelerated reduction of carbon emissions at COP26, frequent comments by the Minister of Mineral Resources and Energy Gwede Mantashe that SA must maximise its use of its coal resources have undermined confidence in SA’s commitment.

In his Medium-Term Budget Policy Statement speech last Wednesday, Godongwana did not outline the conditions of the debt takeover.

“The debt takeover, once finalised, together with other reforms, will ensure that Eskom is financially sustainable. The programme will allow Eskom to focus on plant performance and capital investment and ensure that it no longer relies on government bailouts,” he said.

It had been anticipated that Godongwana would outline the detail of the debt swap last week, including the quantum and the conditions. This is now expected to be announced in February.

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