Standard Chartered warns against coal fleet extension

Standard Chartered Plc warned South Africa that extending the lifespan of coal-fired power plants is unlikely to attract investment to the country, Business Day reported.

Investors want to avoid being trapped in stranded assets given the global shift away from fossil fuels, the Johannesburg-based newspaper said, citing Standard Chartered Bank Southern Africa CEO Kweku Bedu-Addo.

The move would also make it difficult to use sovereign bond sales to fund additional investment in state power utility Eskom given that some arrangements can include so-called use-of-proceeds clauses, Bedu-Addo said.

South Africa’s Electricity Minister, Kgosientsho Ramokgopa, has recommended that the government extend the lifespan of coal-fired plants to help resolve a deepening energy crisis that’s resulted in Eskom implementing blackouts for as long as 12 hours a day.

Standard Chartered joins asset managers Allan Gray and Futuregrowt in criticizing the plan by saying that private investors would face pressure from activists to cut funding for projects that continue to have an adverse impact on the environment.

South Africa had set out to reach net zero emissions by 2050, but Ramokgopa has said the decommissioning schedule must be amended while the nation’s power needs are prioritized.

He said that a choice would have to be made between environmental needs and the collapse of the economy due to the increasing rationing of power.


Top JSE indices