Blog post: World Bank coal loan to South Africa? No thanks! | World Development Movement

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Blog post: World Bank coal loan to South Africa? No thanks!

By Guest, 7 April 2010

Patrick Bond and Desmond D'Sa

It is very important for Brits to not only keep the coal in the hole at home, as so many activists are doing. It's also the responsibility of the British citizen to watch your tax monies, and if via the World Bank they fund climate destruction, poverty and privatisation, to please speak out. 

The World Bank’s fossil fuel portfolio is the world's largest, and in 2004 the Bank board rejected its own internal Extractive Industries Review mandate to 'phase out' oil, gas and coal investments. Now, Bank president Robert Zoellick - a neoconservative ideologue (central to the Project for a New American Century) who served as an Enron advisor, Goldman Sachs official and US Trade representative (when he wrecked the WTO's Doha Round) - claims he is building a 'Climate Bank'. 

Zoellick will undermine any such claim on April 8 when the Bank Board is expected to approve a $3.75 billion loan to the South African electricity utility Eskom, to build the world’s fourth largest coal-fired power plant, Medupi.

Repaying the finance for Medupi and the next coal-fired plant (the world's third largest) will require a 127% real electricity price increase through 2012 for ordinary South Africans (to nearly $0.15/kiloWatt hour), Eskom admits. Disconnections, illegal reconnections (affecting an estimated quarter to third of Eskom's customers) and electrocutions will result.

Meanwhile, the world’s biggest metals and mining houses - Anglo American Corporation, BHP Billiton, Arceleor Mittal and other multinationals - still get the world’s cheapest electricity from Eskom (less than $0.02/kWh). These companies benefit from apartheid-era ‘Special Pricing Agreements’ that Eskom keeps secret, yet there are very few jobs and economic linkages because locally-sold steel and aluminium cost far more than the same products which are send abroad. Also sent abroad are their vast profits, contributing to the country’s severe current account deficit, a factor that led The Economist magazine to rate South Africa the world's riskiest emerging market a year ago.

Does this configuration of costs and benefits sound familiar? From 1951-67, the Bank also financed the world's cheapest power for South African mining houses and white households, at a time black households were denied any access to electricity. The Bank began its apartheid relationship three years after the Afrikaners' National Party took power, and only ceased because SA became an upper-middle income country. 

But the Bank again funded apartheid infrastructure indirectly again in the 1980s, via the Lesotho government's corruption-ridden dam project, to channel water to Johannesburg.

This oppressive relationship - World Bank, big capital and Pretoria versus the people and planet - can be broken. More than 200 organisations across the world have endorsed a critique of the loan. South Durban activists launched the 'No coal loan!' campaign on February 16 with a spirited protest at Eskom’s main local branch. 

South Durban has been an epicentre of protest against fossil fuels, given that our neighbours include the largest and least responsible petro-chemical firms south of the Niger Delta. With electricity prices soaring, many more residents in South Durban are being disconnected. They often reconnect illegally, and as Eskom and the municipality clamp down, the result is more social strife, in a country with what is probably the world’s highest rate of community protest

In Limpopo and Mpumalanga provinces, anger at Eskom and the World Bank comes from eco-social threats in the vicinity of Medupi and the dozens of new coal mines that will feed it. Local ecologies are adversely affected; especially the notoriously degraded water table, as well as the air, land, vegetables and animals due to mercury emissions from coal. 

If these reasons are not enough, Eskom’s desire to privatize 30% of generating capacity is explicitly advanced in the loan, leading to opposition from trade unions – especially the National Union of Metalworkers of South Africa - and consumers. 

Corruption is rife, too. Contrary to supposed anti-corruption policies, the Bank loan will directly fund African National Congress (ANC) ruling party coffers, because the power plant will be built with Hitachi boilers that in turn kick back an estimated $700 million (of which $120 million is pure profit) thanks to a convenient – and utterly dubious – ANC investment in Hitachi. When the deal was done, Eskom chair Valli Moosa was also a member of the ANC’s finance committee. A government investigation released on March 25 found his conduct in this blatant conflict of interest to be ‘improper’. 

If the Bank makes the loan on April 8, South Africans will call for the revival of the World Bank Bonds Boycott, to encourage divestment by institutional investors similar to anti-apartheid tactics, and will also lobby for rejection of the Bank’s forthcoming recapitalization. Zoellick hopes to raise $180 billion - and this loan is just one of countless reasons why he should be denied further British tax receipts.

Scores of organizations across Africa are already on board this campaign, and the next step beyond the World Bank will be to demand that South Africa confront its own climate debt to the continent. 

These opportunities for activism against the world’s largest producers, financiers, regulators and consumers of fossil fuels reflect the need for solidaristic global-local linkages.

Patrick Bond directs the University of KwaZulu-Natal Centre for Civil Society and Desmond D'Sa coordinates the South Durban Community Environmental Alliance

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