King Mswati III obviously look determined to see Eswatini becoming an energy sufficient country through the construction of E12 billion 300 MGW thermal power plant, but regrettably this could remain a farfetched dream at least for the next two to three years.
Through his Speech from the Throne, the King instructed government to source funding for the project within this financial year after it was discovered that it is technically and economically viable.
The King ordered government to ensure the completion of the feasibility study and that “funds are secured for the development of the facility this financial year.”
Against this backdrop, the sourcing of the funds for the project could remain a mission impossible in the foreseeable near future more so because most reputable financiers had decided to drop the financing of coal powered stations.
Financiers are pulling out from financing fossil fuel projects because they are under pressure from the United Nations Climate Action which was pushing for countries to reduce fossil fuel emissions by 2020 and reach the ambitious target of carbon neutrality by 2050. Under the Paris climate agreement, countries are expected to commit by 2020 to more aggressive climate plans, known as nationally determined contributions (NDCs), than those they set in 2015 when the agreement was signed.
The reputable financiers that decided to cease from funding coal projects include the International Monetary Fund (IMF), the World Bank, the European Investment Bank (EIB), the African Development Bank (AfDB) and the African Import Export Bank (AFREXIM Bank).
Notably, most of these financiers are those that have played a huge role in Eswatini’s economic development through funding infrastructure projects.
Big projects which were financed by the aforementioned financiers include but not limited the construction of Lower Usuthu Smallholder Irrigation Project (LUSIP I) and LUSIP II at Siphofaneni and Komati Downstream Development Project (KDDP). And the advantage of these internationally acclaimed financiers is that they provide low lending rates over the private ones.
The European Investment Bank (EIB), the EU’s financing department, will barred funding for most fossil fuel projects.
Since 2013, the EIB has funded €13.4bn of fossil fuel projects.
Under the new policy, energy projects applying for EIB funding will need to show they can produce one kilowatt hour of energy while emitting less than 250 grams of carbon dioxide, a move which excludes traditional gas-burning power plants.
The World Bank’s board in 2013 agreed to a new energy strategy that will limit financing of coal-fired power plants to “rare circumstances,” as the Washington-based global development powerhouse sought to address the impact of climate change.
The bank amended its lending policies for new coal-fired power projects, restricting financial support to countries that have “no feasible alternatives” to coal, as it seeks to balance environmental efforts with the energy needs of poor countries.
The bank also published its “Energy Sector Directions Paper” setting out the principles it would follow in its work in the energy sector.
It said its main focus would be expanding energy access in developing countries while at the same time promoting sustainable energy sources.
It prefers natural gas, the fossil fuel with the lowest carbon output, and the paper says the bank will scale up its work helping countries develop national and regional markets for natural gas.
The paper also confirms the bank’s intention to increase support for hydropower projects.
“We need affordable energy to help end poverty and to build shared prosperity,” said World Bank Group President Jim Yong Kim. “We will also scale up efforts to improve energy efficiency and increase renewable energy according to countries’ needs and opportunities.”
Similarly, the IMF has a policy which has a ban on fossil fuels. When Kenya was developing a one-gigawatt generator near Lamu on the coast, using the latest clean-coal technology, the World Bank and IMF refused to engage on the project.
They have also banned funding to South Africa’s Eskom for coal plants.
The EIB and the African Export-Import Bank (Afreximbank) directed €300 million ($355 million) to support the resilience and recovery of African nations in response to the COVID-19 pandemic.
A quarter of the money was specifically earmarked for climate change mitigation and adaption to help Africa maximise opportunities for a green recovery – green projects such as renewable power, energy efficiency and climate change adaptation measures.
The African Development Bank (AfDB) has also mushroomed and dropped a bombshell that might leave government with an egg on her face.
The regional lender’s President Akinwumi Adesina in 2019 unveiled ambitious plans to scrap coal power stations across the continent and switch to renewable energy.
Adesina outlined efforts to shutter coal-fired power plants and build the “largest solar zone in the world” in the arid Sahel belt.
“Coal is the past, and renewable energy is the future. For us at the African Development Bank, we’re getting out of coal,” Adesina said.
He said the bank’s E7 billion (US$500 million) green baseload scheme will be rolled out in 2020 and is set to yield E98 billion (US$5 billion) of investment that will help African countries transition from coal and fossil fuel to renewable energy, said Adesina.
Adesina also talked about plans for $20-billion of investments in solar and clean energy that would provide the region’s 250 million people with 10 000 MW of electricity.
“There’s a reason God gave Africa sunlight,” said Adesina.
Other than the United Nations Climate Action, the Eswatini Climate Coalition is also against the idea of setting up this coal burning power project with claims that it is not clean, fair and sustainable. One of the bids by the climate coalition to stop the project was a petition they started in December 2020 which seek to stop the project.
Eswatini Climate Coalition started the petition in collaboration with Foundation For Socio Economic Justice – FSEJ Swaziland, International Research Academy for Labour and Education – IRALE and Swaziland Rural Women’s Assembly.
According to the petition, the organisation said the world is facing a climate crisis, and the nation needs an immediate and far-reaching transformation to avoid uncontrollable global heating.
Eswatini Climate Coalition’s Dane Armstrong and Khulekani Msweli said this project is totally, totally unnecessary, and will be highly destructive – it will also undo all the hard work in this country over the last 5 years planning climate-related mitigation and adaptation plans in relation to the global Paris Agreement.
Seeking to minimise the environmental costs of expanding energy supply in developing countries, the bank said it would “only in rare circumstances” provide financial support for new Greenfield coal power generation projects.
Burning coal to generate electricity pumps huge amounts of greenhouse gases into the atmosphere and yet, the bank notes, coal’s share of power generation is near a historic high, with the amount of electricity from coal rising even in Europe.
Eswatini Electricity Company (EEC)’s strategic power projects updates published in October 2020, the feasibility study has been completed and the project will be proceeding to the design and development stage during the period. The Kingdom of Eswatini is expected to contribute 10 percent of the US$ 684.32 million estimated capital cost for the project.
The EEC updates stated that following consultation with the Ministry of Natural Resources and Energy, the project was handed over to Taiwan Power Company as it is part of the Economic Cooperation Agreement (ECA) deal between the Republic of China on Taiwan and the Kingdom of Eswatini.
When sought for comment, Sikelela Khoza, communications officer in the Ministry of Natural Resources and Energy confirmed that the feasibility study was indeed completed.
Khoza said currently, the Ministry was working towards securing the funds for development of the project.