Special Feature: Accounting for darkness (Part Three)


SA CFOs reveal the impact the country’s power crisis is having on people, business, and the economy.

CFOs around the country are concerned about ongoing rolling blackouts that, according to Eskom’s now-former CEO Andre de Ruyter, will likely be around for a while. The grid’s failure is badly affecting productivity, especially at heavy industries, and resulting in the need for massive investments, which are eating into cash flow reserves.

During his State of the Nation address on 9 February, president Cyril Ramaphosa declared the power issue a national state of disaster and shortly thereafter appointed Kgosientsho Ramokgopa as Minister of Energy. Ramokgopa has since said that South Africans should be patient with the power crisis plaguing the country. Measures to right the situation are urgently required, as the economy is losing as much as R900 million every day when stage 6 is in effect, according to the South African Reserve Bank.

In the first and second parts of the series, some of the country’s top CFOs unpacked the impact loadshedding is having on their businesses and consumers, but there may be a potential step forward.

Implats CFO Meroonisha Kerber believes that several actions must be taken concurrently:

  1. Fix current Eskom plant to improve availability, this is critical to ensure baseload supply to our mines (could reduce load shedding in the short term)
  2. Expedite programs to add new supply capacity onto the grid (to provide headroom for economic growth, especially through low carbon alternatives)
  3. Update the Integrated Resource Plan (IRP), which was promulgated in 2018, to allow cost effective and matured technologies onto our long-term national energy plan (to give us a long-term view of how the energy challenge is to be tackled)

Sheldon Friedericksen, former CFO and currently general manager of group benefits at Fedgroup, states that its Impact Investing unit welcomes many of the changes that have been made to the regulatory landscape, especially the electricity provision aspects. “A regulatory landscape, and utility provider, which encourages those with capital to invest in energy provider and efficiency initiatives that can be used for the improvement of the whole ecosystem can only lead to the reduction of loadshedding to at least a once in a while occurrence.”

Banks take up the challenge

Funding projects within the renewable sector means that banks have to come to the party. More and more, they are funding projects that meet Environmental, Social, and Governance (ESG) targets as stakeholders push for companies to be more responsible when using power. Such funding deals have become part of financial institutions’ targets as they move towards no longer funding fossil fuel projects.

One such example is when Nedbank became the first local bank to launch a renewable energy bond on the green segment of the JSE, in 2019. It has subsequently funded deals such as ones for Imperial and Old Mutual, and recently announced that it aimed to about double funding for such projects to R50 billion.

And then there is an agreement between Standard Bank and British International Investment to provide solar company Scatec with R18 billion in debt to fund a battery energy storage and photovoltaic solar project in South Africa.

The project will provide total solar power capacity of 540 MW photovoltaics and 1,1 gigawatt hours GWh of battery energy storage BESS – delivering reliable clean power into South Africa’s grid. “This is not only about ensuring a reliable supply of power to citizens and a growing economy, but also in ensuring that we meet our obligations as a nation to reduce carbon emissions by bringing more clean energy onto the grid,” says the bank

Investec issued its first green bond in 2022, raising R1 billion under its DMTN bond programme. The issue, which was 3,8 times oversubscribed, highlighted a healthy appetite among institutional investors looking to make a positive impact in terms of their ESG commitments.

Absa, too, is providing input for green projects, having recently acted as bond advisors for a R1 billion investment in a green bond issued by Growthpoint Properties transaction and helped Growthpoint with the private placement of the bond on the JSE.

This article was originally published in the first edition of the 2023 CFO South Africa Magazine. Read it here.


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