Eskom coal plants might be at risk

Published by MAC on 2012-06-05
Source: Statement, Independent

Eskom coal plants might be at risk

By Londiwe Buthelezi

Independent (South Africa)

29 May 2012

Eskom might face difficulties in raising funds for its coal-fired projects in future if environmental organisations kept challenging decisions to fund coal plants, Econometrix's chief economist, Azar Jammine, said yesterday.

Jammine was reacting to the release of a report by the World Bank on Friday, which showed that water and environmental concerns regarding the coal-fired Medupi power plant were valid.

The World Bank's inspection report shows that significant environmental, social and climate impacts were not adequately addressed by the bank when it awarded a $3.75 billion (R31bn) loan to Eskom for the construction of Medupi.

The multilateral lender said its inspection panel found that there had been specific instances of non-compliance or inconsistency in areas which included water and air externalities.

Environmental organisations such as groundWork and Earthlife Africa have been involved in monitoring and challenging the World Bank's loan to Eskom for the development of Medupi from the beginning. The organisations asked for the World Bank investigation on behalf of the community living near the plant's site outside Lephalale in Limpopo.

GroundWork said it had not seen the report before it was released by the bank on Friday and was now reviewing it.

But Earthlife Africa already had a "leaked" inspection report in December. The organisation called for the World Bank to act urgently and withdraw the loan, on the grounds that it contradicted the stated intention of the funding.

Jammine said if the World Bank backed out of funding coal projects in the country, this would cause a problem.

"Our big competitive advantage is that we can source coal very cheaply compared to other sources, such as nuclear. What this is doing now is threatening the competitiveness of our electricity supply," he said.

The World Bank approved the Eskom loan on April 8, 2010, with the objective of enhancing energy security while supporting South Africa's long-term carbon mitigation strategy.

But the bank had received a request for inspection before awarding the loan, on April 6, 2010. The request focused on a specific component of the project and the bank's board authorised a full investigation three months later.

This was the first investigation relating to the application of the World Bank's Operational Policy 4.00, which deals with "piloting the use of borrower systems to address environmental and social safeguard issues in bank-supported projects".

Earthlife Africa said the illegal sand mining used for the construction of Medupi had affected the water flow from the local river. It said the region was already struggling with water scarcity. GroundWork said the communities situated next to coal-fired power stations did not even have access to electricity and had to suffer from the health impacts.

The World Bank said yesterday that any bank-financed loan could be investigated by the inspection panel, which was a forum for people who believed that they might be adversely affected by bank-financed operations and brought their concerns to the highest decision-making levels of the bank.

But it said in the case of Eskom, the panel had not found instances of current harm stemming from non-compliance.

Instead of withdrawing the loan, the bank said it would provide intensive support for project implementation, covering technical issues, environmental and social safeguards. The bank would monitor the project through to 2022.

It would be involved in reviewing emissions monitoring, annual ambient air quality monitoring reports, and would work closely with the Department of Water and Environmental Affairs.

The bank's "management will thus closely monitor the project and potential future impacts, and remain engaged with the borrower regarding the management and mitigation of any potential adverse impacts that may arise," the US-based lender said.

Eskom did not respond to questions on whether it had looked at alternatives water sources for Medupi or ways of capturing carbon dioxide and minimising emissions so that they would not pose a health risk to local communities.

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World Bank agrees: MEDUPI poses social and environmental risk

groundWork, Friends of the Earth, South Africa
Earthlife Africa Johannesburg

1 June 2012

Pietermaritzburg and Johannesburg, South Africa, 1 June 2012 – The World Bank Board has agreed that the development of the Medupi Power Station entails substantial environmental and social risks that have to be considered.  This was in response to the Inspection Panel’s 2010 investigation called for by local residents and supported by Earthlife Africa (Jhb) [1] and groundWork, Friends of the Earth, South Africa [2].  This is a vindication of local people’s concerns about the ongoing challengers with the development of Eskom’s coal fired power station.

It was accepted by the Board that the South African governance systems – supposedly acting as a safeguard to protect peoples’ environment and health - did not fully meet and comply with the Bank’s policy.  This is specifically related to non-compliance and inconsistency in the following areas:
“(a) assessment of equivalence and acceptability, in particular on issues relating to assessment of cumulative impacts, independent expert oversight and capacity constraints; (b) impacts on air quality and health; (c) impacts on water resources; (d) impacts on public infrastructure and services, and (e) inadequate consideration and economic analysis of alternatives and risks, particularly with regard to water and air externalities.”

Of concern however, is the fact that the Bank does not see it critical to call for immediate action when evidence of damage is already visible, but rather depends on future monitoring of the situation, such as air emissions and water transfer proposals. 

Bobby Peek, Director of groundWork: “Having visited the area in May, and witnessed for myself the sand erosion along the Mokolo River, it is clear that there is already damage to the environment which is impacting on people’s livelihoods. Thus delaying action and waiting for monitoring which will result in irreversible damage.”

Illegal sand mining along the river is taking place, and as recent as September 2011, in a meeting discussing a basic environmental assessment and National Environmental Management Act Section 24 G application, it is widely discussed.  Ms Malungani, of the Department of Economic Development, Environment and Tourism (LEDET) indicated in the meeting that: “The only thing that makes this thing (illegal sand mining) to be in the spotlight is the applicant’s link with the construction of the Medupi Power Station.”

The Bank’s support of the project and the development of Medupi have opened the area up to become another Vaal Triangle, Highveld and south Durban.  Despite this reality, the Bank recognises that there are no provisions in South Africa law – or its own policies – that would require Eskom to manage the impacts created by its suppliers, particularly sand mining.

Makoma Lekalakala of Earthlife Africa (Jhb) warns that: “This loan and Medupi is the final wedge that is going to result in this place being the next sacrifice zone for elite development in South Africa.  If the existing Matimba Power Station is not providing regular electrification to the neighbouring community of Maropong, the added power of Medupi is not going to power homes but rather will power the expansion of the dirty industry in the area”. 

Resource Generation SA, a subsidiary of Resource Generation Australia has already been granted permission to mine coal on farms near the Limpopo River, Sasol has a plan to build a coal to liquid plant near Medupi and the CIC Energy’s Mmamabula Energy Project in neighbouring Botswana will result in another coal mine and 1200 megawatt power station used to power South Africa.

groundWork and Earthlife Africa (Jhb) will be visiting the area in June to meet with local people to discuss a plan of action for the way forward.

Contacts:

Bobby Peek, Director of groundWork at 033 342 5662 / 082 464 1383
Siziwe Khanyile, Air Quality and Climate Justice and Energy Campaign Manager of groundWork at 033 342 5662 / 073 830 8173
Makoma Lekalakala, Programme Officer of Earthlife Africa (Jhb) at 011 339 3662 / 082 682 9177
Tristen Taylor, Project Coordinator of Earthlife Africa (Jhb) at 011 339 3662 / 084 250 2434

Footnotes

[1] groundWork is an environmental justice organization working with community people from around South Africa and increasingly in Southern Africa on environmental justice and human rights issue focusing on Air Pollution, Waste and Environmental Health. groundWork is a member of Friends of the Earth International.

[2] Earthlife Africa Johannesburg seeks a better life for all people without exploiting other people or degrading their environment. We want to encourage and support individuals, businesses and industries to reduce pollution, minimise waste and protect our natural resources.