South Africa and Eskom can be rightfully pleased with the political declaration – signed with France, Germany, the UK, the US and the European Union – opening the way for an initial $8.5-billion to support the country’s energy transition and its plans to offer social protection for workers and communities that will be negatively affected by the shift from coal.

The partnership, described by UK Prime Minister and COP26 host Boris Johnson as “game changing”, is the culmination of months of hard work undertaken primarily by Eskom, under the determined leadership of Andre de Ruyter.

In fact, only a few months prior to COP26, not many South Africans – including those at the National Treasury – were holding up much hope, or offering much support, for the transaction.

Yet Eskom persisted, perceiving an increasingly urgent desire among multilateral lenders and developed country donors to find a template for supporting decarbonisation programmes in developing countries, which themselves were growing increasingly frustrated by the fact that the yearly pledges of $100-billion in climate-finance support were not materialising.

Eskom took the gap by designing a simple ‘pay-for-performance’ mechanism premised on a multitranche, multiyear facility, capitalised by a multilender syndicate, to fund decarbonisation and social protection projects. It also developed a ready-made project pipeline, located mainly in and around those power stations that are due to be decommissioned before 2030, with Komati, which will be fully shut in 2022, at the vanguard.

Now, it is not yet clear whether this proposed mechanism will indeed be adopted following the political declaration, which calls for the establishment of an inclusive task force, comprised of South Africa and the international partners, to iron out the details over the coming six months.

Nevertheless, the Eskom framework, which was later endorsed by Cabinet and broadened (probably unwisely so) beyond electricity to include electric mobility and green hydrogen, provided a much-needed open door through which the climate envoys, followed by their political principals, could easily walk.

As always, the devil, and potentially our salvation, will be in the detail, as the political declaration only makes a high-level commitment to use various funding mechanisms, including grants, concessional loans and investments, as well as risk-sharing instruments to mobilise the private sector.

Attention will now turn to the grant-to-loan ratio, as well as to defining what exactly is meant by the term ‘highly concessional’. Realistically, most of the finance will take the form of loans rather than grants, which means that South African negotiators will have to sharpen their minds and their pencils if they are to ensure an outcome that is balanced in our favour.

Likewise, they will need to make it abundantly clear that while $8.5-billion represents an important first step in accelerating the transition and offering practical expression to what a just-transition project looks like, it falls short of the $35-billion that is needed.

In addition, the transaction will not address Eskom’s legacy and unsustainable debt, which must still be dealt with, and urgently so.