Ramaphosa considers new plan to cut Eskom debts

South Africa’s President Cyril Ramaphosa is considering whether to back a proposal to improve troubled Eskom Holdings SOC Ltd.’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 440 billion rand ($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 230 billion rand 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 200 billion rand 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.

Now read: Eskom is killing South Africans with its pollution

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Ramaphosa considers new plan to cut Eskom debts