ESKOM and the World Bank: Implications for Ordinary South Africans

1. ESKOM and the World Bank: Implications for Ordinary South Africans Bobby Peek groundWork, Friends of the Earth South Africa

2. Are consumers going to be required to contribute to ESKOM’s payment of World Bank debts?

4. Some starting points • Earthlife Africa • If Eskom customers get a hike from 50kwh to 200 kwh SA would only need 17.5% of Medupi (ELA Jhb 2010) • If 1 to 2 cents per kwh addition on industrial tariffs SA would not need the World Bank • Steve Lennon from Eskom • Eskom expansion is about base load • Interested only in large renewables

5. A bad project, contributing to energy poverty and environmental destruction • Eskom’s strategy based large coal-fired stations; • 40 new coal mines, which will add to South Africa’s already extremely high carbon intensity; • Designed to continue supplying the world’s cheapest electricity mainly to large energy-intensive industries;

6. A bad project, contributing to energy poverty and environmental destruction • Corporations are headquartered abroad (hence contributing to the profits outflow on South Africa’s balance of payments); • Paid for by unaffordable tariff increases imposed on ordinary South Africans, while the beneficiaries – the largest industrial consumers - are exempt from price rises because of multi-decade special purchase agreements offered to them during apartheid and in the 1990’s; • SPA contributed to a large extend to Eskom’s R9.75 Billion loss in the last financial year;

7. A bad project, contributing to energy poverty and environmental destruction • Unable to alleviate ‘energy poverty’, but instead entrenches suffering by imposing ‘cost recovery’ on people who cannot afford it, with Eskom already admitting a ‘typical township household’ will face a 2009-2012 monthly price rise from R360 to R1000; and • Conditionality: Dollar Denomination – Rand crashes are regular this implications for payment.

8. Medupi is in Limpopo Province, the second poorest, near Lephalale The largest electricity consumers are smelters in Richards Bay and the Vaal

9. What does this mean for the poor? • Unaffordable and lack of access; • In South Africa estimated that approximately 1 million households in electrified areas use in excess of 1 million tons of coal per year as a domestic energy source; • The health impact associated with the use of coal for domestic energy alone costs the State R1.1 billion per year; • In the Vaal 65% of the acute respiratory problems from burning coal; and • Exposed to 600 kgs of Hg per annum in the ambient air.

10. Implications for CC commitments & alternative renewable source energy • SA we produce 40% of Africa’s CO2 yet we only have 6% of the population • Eskom’s new build will nearly double generation capacity to 80 000 MW by 2025 • March 2008 Eskom produced 223.6 mt of CO2 (does not include diesel peaking power plants and methane emissions) • If by 2018 a third new coal fired power plant is built tripling of CO2 to 670 mt per annum • No calculations undertaken yet on the carbon footprint of the 40 additional mines • Minuscule percentage of the loan to renewables: 6.9 percent.

11. Why are we so ignorant about climate?‘Is climate change a “serious problem”’? Global Scan polls citizenries: percentage answering ‘Yes’ (2003, 2006)

12. Not in leaders’ interests to address climate

13. Why Copenhagen Summit failedOn last day, backroom deal by Barack Obama (1/2 Luo), Jacob Zuma (Zulu), Lula da Silva, Manmohan Singh, Wen Jiabao – designed to avoid needed emissions cuts; instead, business-as-usual for white-owned fossil-fuel industry and mainly-white overconsumers

14. SA Strong Arm Tactics – Cat out of the Bag! • “I would rather die with dignity than sign an agreement that will tunnel my people into an inferno. And if there is no equitable deal then let there be no deal.” (Sudanese Chair of the G77, Lumumba Di-Aping) • DEA Representative Joanne Yawitch: “We have to manage the situation” in reference to the Sudanese critique.

15. Local and National Impacts: Air Pollution and Health • DEA: Waterberg a ‘non-attainment’ zone, in other words a sacrifice zone; • ROD without pollution reduction requirements – since WB Sulphur Scrubbers promise first 2018 now 2021; • No health study on the population; • Studies show with Medupi elevated levels of SO2; and • Cross border implications (Safari 2000).

16. Eskom’s sulphur, nitrogen and particulate emissions.

17. Local and National Impacts: Water • Medupi will require about 6 million cubic meters of water per annum; • If FGD is to be installed – at least another 6 million cubic meters per year; • Illegal sand mining; • Hartbeespoort Dam, it could be dry in 90 days with the water needs of Medupi; and • “Strategic Planning for Water Resources in South Africa, 2009”, by DWA: • Recycled waster from Gauteng inadequate: Therefore Lesotho Highland (Orange River Catchment; Vaal River and the Crocodile Catchments).

18. Local and National Impacts: Social impacts • Medupi built on traditional grave sites; • Influx of labour from outside Lephelale which has implications the spread of HIV/Aids; • Local people not getting meaningful employment; • Tensions between politicians and civil/traditional leadership; and • Impact on local tourism economy.

19. Local and National Impacts: Mining • More than 40 new coal mines planned; • No EIA’s undertaken or accumulative impact study undertaken; • Acid Mine Drainage is of concern; and • Mining and implications for people traditional livelihoods.

21. Most recent SA attack on climate: $3.75 bn loan from the World Bank to mainly finance Eskom’s coal-fired Medupi power plant… why is it so wrong? Source: groundWork & Earthlife Africa

22. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history Eskom’s Medupi: world’s fourth-largest coal-fired plant, to emit 25-35 mn CO2-equiv. tonnes/year (more than 115 countries)

23. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history Medupi has no pollution scrubbers yet ambient SO2 standards already excessive, area is water-scarce, 40 new coal mines needed, and mining causes extreme water degradation

24. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history Bank’s Dec. 2009 ‘consultation’ had no attendees from affected areas; Bank procurement rules violated; Eskom has huge governance crises, including extreme leadership turmoil (e.g. chair and CEO fired each other, Nov. 2009)

25. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history 25%/year price rise; 127% real increase for 2008-12; electricity disconnections, ubiquitous ‘service delivery protests’ and threatened national labour strike

26. 1/3 of Eskom’s four million customers have ‘zero’ consumption – most were disconnected

27. Upsurge of community protest against electricity disconnections, price increases, World Bank loan

28. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history sweetheart deals: multi-decade ‘Special Pricing Agreements’ made during late apartheid give BHP Billiton and Anglo American R0.12 ($0.015)/kWh electricity for smelters (1/6 what households pay); resulting in Eskom’s R9.7 billion ($1.3 bn) loss in 2009

29. SA offers world’s cheapest electricity to metals smelters - phase-out needed! Eskom brags in 2009 annual report, though reason for huge 2009-10 losses

30. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history BHP Billiton, Anglo, Arcelor Mittal, Xstrata and other beneficiaries of Eskom largesse headquartered (and send their profits) abroad, hence putting extreme pressure on current account deficit

31. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history SA’s foreign debt is already dangerously high - $80 billion – and repayment costs on Medupi loan will soar when R/$ rate crashes (as now happens regularly)

32. Since early 2000s, rapid rise in SA foreign debt, to the point of severe debt/GDP danger levels

33. Five SA currency crashes, 1996-2008 when Rand falls 15%+, then repayment of World Bank’s $ debt much more expensive

34. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history privatisation of electricity generation is underway in this loan (for ‘figleaf’ renewable component) – and will be increased for Kusile (to 49% private ownership); unions fighting for full public supply

35. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history ruling party investment arm, Chancellor House, to ‘earn’ at least R50 mn (probably more) pure profit from contracts in conflict-of-interest Hitachi tender; Eskom chair Valli Moosa acted ‘improperly’, according to state investigators

36. Ten reasons to reject Medupi • climate destruction • local ecologies, health • procedural problems in World Bank process • poor people pay excessive prices • multinational corps. get ultra-cheap power • profit outflow to multinationals • increased foreign debt • privatisation • ANC corruption • World Bank's apartheid history from 1951 (3 years after formal apartheid began) to 1966, loans to Eskom of $100 m resulted in no electricity to black townships or rural areas; Jubilee SA demands ‘reparations’ for Bank's apartheid profits

37. Civil Society Response • Local to global: Rejection of loan by more than 200 organisations • Churches, Unions, large NGO’s, Community based organisations; African NGO’s. • Pressure of civil society led to: UK, The Netherlands; Italy, Norway and the US from abstaining from the vote; • groundWork and Earthlife Africa have supported local people for a investigation by the Inspection Panel of the World Bank;

38. Civil Society Response • Local Traditional Leaders, Farmers, Community people are all opposed to Medupi; • Eskom is being spotlighted in various World Bank Energy Strategy negotiations globally from Washington to Europe and in Africa; • What has been the response of civil society organizations to ESKOM – World Bank Loan, is there a need to call for action by civil society against this social injustice that will affect next generations; and • Global lobby to pressure WB to move away from fossil fuels.

39. Whose energy future? • Imogen Mkhize: 18th World Petroleum Congress • “Although the African energy sector has its own challenges supplying the world with its future energy needs is the ultimate goal” (Business Day September 23, 2005); • Business Report (23 September 2005): • “World Looks to Africa to Keep Oil Economy Ticking” • 80% of all oil projects that the World Bank invested between 1992 and 2003 were for export back to Western Europe, Canada, the U.S., Australia, New Zealand and Japan. • World Bank Loan to Eskom: 3.75 Billion US $ - the largest biggest loan to an African country • Nuclear is ‘the’ false solution

40. Elements of an Industrial and Energy Strategy for Carbon Neutrality • People working for reasonable remuneration, rather than dehumanising and exploitative but rather in conditions that are safe, rewarding and secure • Communities having decent levels of affordable basic services and infrastructure to be enjoyed by all and not only those that can afford them • Individuals and families able to access at a minimum the basic goods of human life starting with nutrition and safe and comfortable accommodation • Clean and healthy environments – where people live and work – that is nurtured by the very way people in which people live.

41. Elements of an Industrial and Energy Strategy for Carbon Neutrality • Abandoning subsidised export-led economic growth • Favour servicing local basic needs • Build local/national sovereignty away from subordination by transnational capital and market interest. • Restructuring the pricing and production of energy in SA • Local ownership of economic assets – will not be exposed to the financial crisis as we are now • Political commitment towards achieving sustainability – abandon the dichotomy between ‘development and environment’

42. Demand side management • Eskom must begin by phasing out electricity to smelters that have little linkage with the South African economy that are capital - rather than jobs-intensive. • Concrete plans should be made for a ‘just transition’, so as to provide alternative, well-paid ‘green jobs’ – e.g. in subsidised thermal-solar geysers for every house – to those workers who are employed at the smelters. • At the same time, the special purchase agreements should be disclosed to the public and opened for renegotiation. • The freed up energy should be redistributed to provide for a much larger ‘lifeline’ supply of universal Free Basic Electricity • By not expanding its coal/nuclear facilities and instead redistributing the electricity capacity it has, and by simultaneously switching to renewable sources, Eskom and South Africa can survive this fossil fuel, financial and climate crisis. • But it can only do so if it is not in the clutches of the world’s leading financier of climate destruction, the World Bank.