South Africa inks loan deals for Just Energy Transition

South Africa has entered into loan agreements with the World Bank, KfW, and AfDB to support country’s commitment to a just transition for a low-carbon and resilient economy.

The Eskom Just Energy Transition Project (EJETP) is a project approved by the World Bank Group in November 2022 at the request of the Government of South Africa. It will support its public energy utility, Eskom, to decommission the 56-year-old Komati coal-fired power plant, repurpose the project area with renewable energy and batteries, and create opportunities for workers and communities. If successful, the project could provide a blueprint for a just energy transition in South Africa and beyond.

READ:Senegal to host 4th edition of MSGBC Oil, Gas & Power Conference Exhibition

Loan distribution

The loans which will be provided directly to the National Treasury for general budget expenditure purposes include a concessional loan of US $1bn, KfW is contributing some US $547M while AfDB is offering an additional US $300M.

KfW and AfDB are partnering with the World Bank on the second Development Policy Operation (DPO). This collaboration aims to support South Africa’s key reforms under climate change and the electricity sector.

The National Treasury’s funding strategy involves diversifying its funding mix for international borrowing. Accessing concessional financing instruments from development partners helps support the government’s reforms and reduces the overall cost of borrowing.

The National Treasury expressed gratitude to the World Bank, KfW, and AfDB, highlighting the collaborative efforts between the Government of Germany, the World Bank, AfDB, and the South African government that led to the successful conclusion of the loan agreements.