Standard Bank chair highlights importance of debt transparency at WEF

The World Bank is one of the largest multilateral lenders in support of South Africa’s efforts to promote long-term energy security and a low carbon transition. Photo: File

The World Bank is one of the largest multilateral lenders in support of South Africa’s efforts to promote long-term energy security and a low carbon transition. Photo: File

Published Jan 18, 2024


Standard Bank Bank Group has approached the World Bank with a proposal to fast-track the financing of gas-to-power projects in Africa in a bid to attain energy security, accelerate the transition from fossil fuels, and improve economic development on the continent.

The World Bank is one of the largest multilateral lenders in support of South Africa’s efforts to promote long-term energy security and a low carbon transition.

Last year, the World Bank approved a R19 billion loan to help South Africa reform its energy sector as the country tries to overcome regular power cuts that have severely crippled economic growth.

Speaking during a panel discussion at the World Economic Forum (WEF) annual meetings yesterday, Standard Bank chairperson Nonkululeko Nyembezi highlighted the importance of increased debt transparency in highly-indebted countries.

Nyembezi said the lack of complete transparency about the terms and the values of the loans to countries by “some of the lenders” had bedevilled their debt-restructuring efforts.

She said it would be “extremely helpful” if a credible body such as the World Bank took responsibility for certification of country-level sustainable plans, as financial institutions were getting into the area of sustainable finance.

“We’ve gone to the World Bank and made a direct proposal for the World Bank to become more explicit about when it would back using gas, financing of gas, because it is still a very contested space. For some people, it's fossil fuel. For others, it’s a transition fuel,” Nyembezi said.

“Our CEO (this morning) talked about Lagos as an example of this thing. Lagos almost exclusively depends on own-diesel generation for power and, on top of that, Nigeria also flares gas.”

Natural gas is considered a transition between renewable and non-renewable energy sources and has a pretty good reputation among fossil fuels because though it is not environmentally-friendly, it is just less polluting.

Nyembezi said the financing of gas-to-power projects would accelerate decarbonisation, but also develop human capital and develop economies in the African continent.

“Now imagine if you were to finance gas to power the city of Lagos, replace all of this diesel with gas and stop flaring gas, just how much you could contribute to decarbonisation on the one hand, and to development of the city on the other,” she said.

“So, from an African perspective I think it is time for us to stop pussyfooting about funding gas because this is one of the most important levers by which we can address both climate change, as in South Africa we burn coal, and very many countries in Africa burn biomass of whatever kind.”

This comes as South Africa recently published a draft of its long-awaited energy blueprint, the Integrated Energy Plan (IRP) of 2023, which envisages the procurement of a combination of wind, photovoltaic solar, wind, battery storage, and 6 000MW of gas from independent producers to reduce and ultimately end load shedding which was implemented for a record 332 days in 2023.

The IRP says gas-to-power technologies in the form of combined-cycle gas turbine (CCGT), Closed Cycle Gas Engine (CCGE), and Internal Combustion Engine (ICE) provide the flexibility required to complement renewable energy.

The draft IRP 2023, which has been gazetted for public comment, has received a lot of criticism from analysts and renewable energy lobbyists for leaning too much in favour of fossil fuels.

Critics have pointed out that the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA) were clear that to meet the global goal of limiting climate change to near 1.5°C the world cannot afford to make use of any additional fossil fuels.

However, WWF South Africa senior manager for climate action James Reeler said the IRP’s near-term reliance on fossil gas to make up a shortfall in generation should not be construed to mean that exploitation of gas reserves was a viable option for the long term.

Reeler said a legitimate economic assessment of the impacts of a high emissions pathway should also consider the additional effects of being unable to export products to key markets, as well as the additional climate and human health impacts.

“The draft IRP 2023 is not only disappointing, it also seems to fly in the face of all other electricity generation models, both national and internationally,” Reeler said.

In a separate development, the WEF yesterday announced the launch of a new alliance to provide a platform for developing economies to raise awareness about their clean energy needs, share best practices and sustainably accelerate their energy transitions.

The Network to Mobilize Clean Energy Investment for the Global South is made up of 20+ CEOs and government ministers, including from across Colombia, Egypt, India, Japan, Malaysia, Morocco, Namibia, Nigeria, Norway, Kenya and South Africa.

The overall annual investment in clean energy in the Global South needed to triple from $770 billion (roughly R15 trillion) currently to $2.2-2.8trl by the early 2030s, it said.