South African investors have pulled out of a local multi-billion dollar coal-fired power plant project, putting its construction at risk as opposition to the use of fossil-fuels in the country grows despite crippling power shortages.
Across the world, investors are coming under increasing pressure to ditch coal, the most polluting of fossil fuels, and switch to greener energy.
The latest exits from the 630 megawatt (MW) Thabametsi coal-based power plant project in the water-scarce northern Limpopo province follow the withdrawal last month of South Korea’s state-run Korea Electric Power Corp (KEPCO), and South Africa’s big four banks last year after they were targeted by environmental activists.
Africa’s biggest CO2 emitter and one of the world’s top-ten coal producers had pledged to reduce emissions by more than one third by this year under the Copenhagen Accord by retiring numerous coal plants and intensifying renewable energy investments.
But the government says it is reliant on coal to increase generation capacity at state-owned power utility Eskom following years of electricity shortages and rolling blackouts.
KEPCO, which held a 50% stake in the project, told Reuters last week it had initially pledged about US$2.1B in funding.
South Africa’s biggest state pension fund manager the Public Investment Corporation (PIC), and the Industrial Development Corporation (IDC), told Reuters they would no longer support the project, which was planned to come online in 2021.
“We would not consider supporting it in its current form. We recognise that there is a need for clean coal,” IDC said in a statement.
PIC said it had decided not to continue backing the project, without given further details.
The Development Bank of Southern Africa (DBSA) said it was reassessing the project to determine if it was in-line with its policy of a “just transition towards a low carbon economy”.
Only Japan’s Marubeni, which along with KEPCO held a 50% stake, remains a backer of the project.
The company’s local office did not respond to requests for comment.