This decision fits with the banking group’s commitment to “green” funding, responsible lending and supporting sustainability initiatives. The bank says its initial proposal for funding the construction of the Thabametsi and Khanyisa independent power producers (IPPs) has lapsed and will not be renewed.
This follows a corporate policy announced in early 2018 that the bank would no longer fund the construction of any new coal-fired power plants beyond its existing commitments to fund Thabametsi and Khanyisa, which were included as part of the new coal IPP programme in the South African Department of Energy’s draft integrated resource plan for electricity, Draft IRP 2018.
The proposed Thabametsi 557 MW coal-fired power station, which would be largely owned by Japan’s Marubeni and South Korea’s Kepco, was planned to be built near Lephalale in Limpopo, while the Khanyisa 306 MW power station was to be sited near eMalahleni in Mpumalanga. The biggest shareholder of Khanyisa would be Saudi-owned Acwa Power.
Nedbank says that it would prefer to offer financing for projects in energy efficiency and renewable energy, such as landfill gas, solar, hydro and wind projects. The bank says in its core business of lending and investing, it has a crucial role to play in transforming the economy and addressing climate change and that it seeks to “use [its] financial expertise to do good for individuals, businesses and society.”
Nedbank’s announcement follows reports in September 2018 of Standard Bank’s withdrawal of financing the construction of coal-fired power. Currently, it appears that FirstRand, ABSA and the Development Bank of South Africa (DBSA) are still willing to offer funding for the Thabametsi and Khanyisa projects, but this may change. Nedbank and Standard Bank have followed the global trend of financial institutions refusing to fund the construction new coal-fired power plants.