Ramaphosa mulls green energy plan to cut Eskom’s debt payments

South Africa’s President Cyril Ramaphosa is considering whether to back a proposal to improve troubled Eskom’s debt terms by closing polluting coal plants early to make way for renewable energy.

A special purpose vehicle would lower interest rates paid by the state-owned utility by accelerating the closure of coal-fired stations, according to a person familiar with the matter who asked not to be named because the information isn’t public. The plan was submitted to Ramaphosa by a task team, which has suggested a range of options for rescuing Eskom, the person said.

The power company is struggling under R440 billion ($31 billion) of debt and expected to report another loss for the financial year. Ramaphosa said last week that his government would soon give Eskom “a significant portion” of the R230 billion it needs over the next decade to remain solvent.

Development finance institutions are interested in the Eskom debt plan, which would unlock as much as R200 billion of climate change mitigation funding at discounted interest rates, Johannesburg-based City Press reported last month, citing Grove Steyn, a member of the task team. South Africa currently generates about 90% of its electricity from coal.