STATEMENT FROM SA AND AFRICA CIVIL SOCIETY
ON ESKOM’S PROPOSED $3.75 BILLION WORLD BANK LOAN

Should the World Bank grant a $3.75 billion (R29 bn) loan to Eskom ? No. We South African and African
organisations which for years have advocated social and environmental justice here and abroad, oppose
Eskom’s proposed Bank loan – and indeed its new construction programme more generally - for several
reasons.

1) A bad project, contributing to energy poverty and environmental destruction. This particular
project is fatally flawed, on grounds that Eskom’s strategy is :

• based primarily on large coal-fired stations (followed by nuclear) and as many as 40 new coal
mines, which will add to South Africa’s already extremely high carbon intensity, as well as the air
pollution and degradation of scarce water resources ;

• designed to continue supplying the world’s cheapest electricity mainly to large energy-intensive
industries, including steel and aluminium, whose corporations are headquartered abroad (hence
contributing to the profits outflow on South Africa’s balance of payments) ;

• to be mainly 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 ; and as a
result,

• 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 ($48) to R1000 ($130).

2) Inappropriate financing. We therefore oppose all funding, foreign and local, for Eskom’s coal/nuclear
expansion plans. Were Eskom to engage in a reasonable energy policy based on demand management,
with supply shifting to renewable, and the expansion of Free Basic Electricity beyond the current tokenism
as well as connections to urban shackdwellers and the rural poor, that would be worthy of support. As for
green energy investments that are not import-intensive, local financing would be more appropriate than a
World Bank loan - and is readily available, including through state debt and halting subidised electricity
contracts to multinationals. The financial danger of a World Bank loan is that the SA currency will crash (as
it has five times since 1996), hence making repayment much more expensive (since the loans are not
repaid in rand but in dollars), hence adding to the extreme cost burden poor South Africans will face.

3) Eskom’s special responsibility to Africa. We must not forget that South Africa consumes more than
its fair share of Africa’s environmental space for development (more than 40% of CO₂ emissions from just
6% of Africans), mainly because of Eskom, Sasol and other large corporations which emit the vast bulk of
greenhouse gases. The World Bank loan will sink Eskom – and South Africa - into not only financial debt to
the West, but much deeper ‘Climate Debt’ to Africa. African civil society unites with SA critics of Eskom’s
irresponsible climate-denialist projects.

4) The World Bank’s special responsibility. Specifically, we oppose World Bank funding for Eskom and
call on all governments with Bank voting power to oppose the proposed loan on March 24, when the Board
meets. The World Bank has still not offered reparations for its 1951-67 apartheid-empowering loans to
Eskom, for which only white people received electricity (but the entire society repaid the loans). Further, the
Bank has consistently promoted privatisation and/or commercialisation of state utilities and cost-recovery
(resulting in disconnections), which together prevent access to electricity by poor South Africans. We call
on the Bank’s member governments and directors to endorse the recommendations of the 2004 World
Bank Extractive Industries Review. The Review found that, aside from climate damage, the Bank’s fossil fuel projects had neither the intention nor the effect of alleviating poverty and called for them to be phased
out.

5. The US government’s special responsibility. We especially call on the US Treasury – which has
opposed Bank coal financing in line with a recent ‘Guidance Note’ – to veto the proposed loan, and to also
halt US government subsidies to the coal industry so as to avoid the legitimate charge against Washington
of hypocrisy. We are delighted about three processes internal to the US, which are a model for our own
work in South Africa : Sierra Club legal action has prevented new coal-fired plants from being built ;
courageous activists in West Virginia are engaged in direct action to halt ‘mountaintop coal removals’ ; and
the US Environmental Protection Agency adopted December 2009 provisions to implement its
‘endangerment finding’ that carbon from coal is a pollutant and must be directly regulated. What must be
avoided is the US imposing responsibility for carbon cuts on the South, but without providing funding or
technology support for renewable energies as part of the ‘Climate Debt’ that the US owes for taking up so
much environmental space. World Bank Executive Directors representing the South have responded to the
US Guidance Note making several of these points, and they oppose the use of the Bank as an instrument
of US power. This is a fair point, and a long-standing grievance we all share, given Washington’s extremely
destructive role at the Bank and in the world economy. Nevertheless, the dissident Executive Directors’
response supports further Bank funding for fossil energy and specifically coal-fired power stations, justifying
coal as necessary for poverty alleviation and economic growth in developing countries. In reality, economic
growth has been accompanied by growing inequality in South Africa and many other countries that suffer
‘resource curse’. The poor are mostly left worse off than before. Even where their income improves by
conventional measures, the gains are lost to services cost recovery (and disconnections), to health costs
imposed by pollution, to the loss of nonrenewable resources, to water/land theft associated with coal-fired
power, and to the increased cost of access to amenities previously provided as public goods. In addition, it
is common cause that the poor are most vulnerable to climate change. In many countries, they are already
feeling the costs in intensified droughts and floods and in the loss of land through coastal erosion.

6) Towards the transformation of energy, production and financing. We see renewable energy, not
coal-fired power stations, as the optimal development path for Southern economies, creating more jobs,
building local manufacturing capacity, and avoiding the environmental mistakes of Northern countries. As in
South Africa, most World Bank coal power projects are designed to supply industry, not people. They do
not necessarily increase per capita access to energy. The industries in turn are mostly geared for export in
line with the World Bank’s promotion of export oriented production. The goods are then consumed primarily
in developed countries. Further, many industries are established with foreign direct investments. In the
process, much of the heavy industry in developed countries has relocated to developing countries in search
of cheaper energy and cheaper labour. Yet because their headquarters are in London, Melbourne, New
York, Toronto, Zurich and other offshore sites, a substantial portion of profits is returned to rich countries,
exacerbating the poor countries’ balance of payments deficit. Because South Africa’s payments deficit is so
extreme, due to the outflow of profits and dividends to foreign corporations which benefit from the world’s
cheapest electricity, The Economist magazine judged the country as the world’s riskiest emerging market
(24 February 2009).

7) The demand side management alternative. Instead of expanding its coal/nuclear facilities, Eskom
should engage in serious demand side management, beginning by phasing out electricity to smelters that
have little linkage with the South African economy and 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 – with a rising block tariff to encourage conservation to improve spinning
margins which will buy time for a switch into renewable energy technologies. By not expanding its
coal/nuclear facilities and instead redistributing the electricity capacity it has, and by simultaneously switching to renewable sources, Eskom can survive this 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.

ENDORSEMENTS :

South Africa
• 350.org South Africa
• Alternative Information Development Centre
• Anti Privatization Forum
• Austerville Clinic Committee
• Benchmarks Foundation
• Bluff Ridge Conservancy
• Boitshoko Home Based Care
• Buhlebuyeza
• Ceasefire Campaign
• Centre for Civil Society Environmental Justice Project
• CJN !SA
• Citizens United for Renewable Energy and Sustainability
• Clairwood Ratepayers Association
• Diakonia
• Displaced Rates Payers Association
• DUCT Howick
• Durban Airport Farmers Association
• Earthlife Africa Ethekwini
• Earthlife Africa, Johannesburg
• Eastern Cape Environmental Network
• Ecumenical Service for Socio-Economic Transformation
• Ecumenical Women’s Prayer in Action
• Environmental Monitoring Group
• Esigodini Environmental Group
• Federation for a Sustainable Environment
• General Industries Workers Union of SA
• Greater Edendale Environmental Network
• groundWork
• Inner City Resource Centre
• Isipingo Environmental Committee
• Isipingo Ratepayers AssociationJoint Action Committee of Isipingo
• Kathorus Concerned Residents
• KwaZulu-Natal Subsistence Forum
• Merebank Clinic Committee
• Merebank Residents Association
• Noordhoek Environmental Action Group
• Off the Ground
• Pelindaba Working Group
• Phulhumani CO OP
• Pietermaritzburg Association for Christian Social Awareness
• Renewable Energy Centre
• Silverglen Civic Association
• Siyathuthuka Group
• Socialist Group
• South African Chemical Workers Union (Gauteng)
• South African Council of Churches (Gauteng)
• South African Council of Churches
• Southern African Faith Communities’ Environment Institute
• South Durban Community Environmental Alliance
• Southern Cape Land Committee
• Soweto Concerned Residents
• Soweto Electricity Crisis Committee
• Springs Eco Friends
• Sustainable Energy and Climate Change Project
• Timberwatch
• Treasure Beach Environmental Forum
• Trust for Community Outreach and Education
• Tsogang Youth Group
• Umphilo waManzi
• Vaal Environmental Justice Alliance
• Vezani Disable Support Group
• Well Worn Theatre
• Wentworth Development Forum
• Wildlife and Environmental Society of South Africa (Gauteng)
• Workers World Media Production
• WWF SA
• Youth Agriculture Ambassadors

Africa outside South Africa
_ • Ghana Friends of the Earth Ghana
• Kenya Kenya Debt Relief and Development Network
• Kenya Pan African Climate Justice Alliance
• Malawi Citizens for Justice
• Mozambique Justiça Ambiental
• Namibia Earthlife Africa
• Nigeria Environmental Rights Action
• Sierra Leone Friends of the Earth, Sierra Leone
• Swaziland Yonge Nawe
• Tanzania Lawyers Environmental Action Team
• Togo Les Amis de la Terre
• Tunisia Association Tunisienne Pour la Nature et l’Environnement
• Zimbabwe Magamba Cultural Collective
• Pan Africa Jeunes Volontaires pour l’Environnement
• Pan Africa Africa Youth Initiative on Climate Change

International
• International Focus on the Global South
• International Global Anti Incinerator Alliance
• International Third World Network
• Europe CEE Bankwatch Network (Central and Eastern Europe)
• Europe ECA-Watch Europe
• Europe EURODAD
• Australia Jubilee Australia
• Australia Friends of the Earth Australia
• Bangladesh Equity and Justice Working Group
• Bangladesh Solidarity Workshop
• Belgium 11.11.11, Coalition of the Flemish North-South Movement
• Bosnia-
Herzegovina Society for Threatened Peoples International
• Brazil Friends of the Earth Brazil
• Bulgaria Bulgaria For the Earth !
• Bulgaria Centre for Environmental Information and Education
• Canada Canadians for Action on Climate Change
• Canada Halifax Initiative Coalition
• Czech Republic Centre for Transport and Energy
• Czech Republic Hnuti DUHA
• Denmark NOAH, Friends of the Earth, Denmark
• Estonia Estonian Green Movement
• France HELIO International
• France IPAM
• France Les Amis de la Terre/Friends of the Earth France
• France Pres.Noe21
• Georgia Green Alternative
• Germany GegenStroemung - CounterCurrent
• Germany INFOE - the Institute for Ecology and Action Anthropology
• Germany Urgewald
• Hungary National Society of Conservationists - Friends of the Earth Hungary
• India National Forum of Forest People and Forest Workers
• India Community Environmental Monitoring - A Project of The Other Media
• India Corporate Accountability Desk of The Other Media
• India Foundation for Dialogues on Indigenous culture and environment
(DICE Foundation)
• India India People’s Science Campaign
• India Indian Social Action Forum
• India Nityanand Jayaraman
• Indonesia Wahana Lingkungan Hidup Indonesia (WALHI/Friends of the Earth
Indonesia)
• Ireland Debt and Development Coalition Ireland
• Italy Campagna per la riforma della Banca mondiale
• Latvia Latvian Green Movement
• Lebanon IndyACT - The League of Independent Activists
• Lithuania Atgaja
• Macedonia Eco-sense
• Malaysia Consumers Association of Penang
• Malaysia Sahabat Alam Malaysia (SAM/FoE Malaysia)
• Mauritius FOE Mauritius
• Mexico Fundar, Centro de Análisis e Investigación, A.C.
• Mexico Other Worlds
• Nepal ProPublic/Friends of the Earth Nepal
• Norway Friends of the Earth Norway
• Norway Spire
• Norway The Development Fund
• Palestine Palestinian Environmental NGOs Network (PENGON/Friends of the Earth
Palestine)
• Papua New
Guinea Center for Environmental Law and Community Rights Inc.
• Poland Polish Green Network
• Portugal Euronatura - Centro para o direito ambiental e desenvolvimento
susstentado
• Russia Sakhalin Environmental Watch
• Scotland Jubilee Scotland
• Slovak Republic Friends of the Earth - Center for Environmental Public Advocacy
• Spain Foundations for the Future
• Spain Ibiza Ecologic
• Spain Observatori del Deute en la Globalització
• Sri Lanka Centre for Environmental Justice
• Switzerland Berne Declaration
• The Philippines Alliance of indigenous women’s organizations in the Cordillera
• The Philippines Legal Rights and Natural Resources Center (LRC-KsK/ Friends of the Earth
Philippines)
• The Philippines NGO Forum on Asia Development Bank
• The Netherlands Both Ends
• Ukraine National Ecological Centre of Ukraine
• United Kingdom Bretton Woods Project
• United Kingdom ClientEarth
• United Kingdom FERN
• United Kingdom Friends of the Earth England, Wales and Northern Ireland
• United Kingdom World Development Movement
• United States Africa Action
• United States Alternative Energy Resources Organization
• United States California Communities Against Toxics
• United States Climate SOS
• United States Center for Biological Diversity
• United States Columban Center for Advocacy and Outreach
• United States Concerned Residents of Portland, NY + People Like Us
• United States Crude Accountability
• United States Friends of the Earth, US
• United States Bank Information Center
• United States Foreign Policy in Focus
• United States Gender Action
• United States Green Delaware
• United States Global Exchange
• United States International Accountability Project
• United States International Forum on Globalization
• United States JPIC Missionary Oblates
• United States Jubilee Montana Network
• United States Jubilee USA Network
• United States Justice in Nigeria Now
• United States Oil Change International
• United States Maryknoll Office for Global Concerns
• United States Massachusetts Coalition for Healthy Communities
• United States National Wildlife Federation
• United States New Rules for Global Finance
• United States Rainforest Action Network
• United States Pacific Environment
• United States Seed Systems
• United States Sierra Club
• United States Sustainable Energy and Economy Network
• United States Valley Watch, Inc.
• United States West Papua Advocacy Team
• Uruguay REDES (Red de Ecología Social)