World Bank Supports South Africa’s Energy Transition with $1 Billion Loan

South Africa is set to receive a $1 billion Development Policy Loan (DPL) from the World Bank, aimed at reducing the country’s reliance on coal and promoting a transition to a low-carbon economy. Supported by the African Development Bank, KfW, and Canada, this loan is expected to alleviate the ongoing energy crisis and facilitate a Just Energy Transition.

As one of the world’s top 20 greenhouse gas emitters, South Africa plans to restructure its state-owned power company, Eskom, to enhance its efficiency. This restructuring is also intended to attract private investment in renewable energy sources, particularly solar technology. This initiative aligns with the Presidential Energy Plan and seeks to mitigate GDP losses caused by frequent power outages while moving away from coal-fired energy.

The loan aims to address the environmental impacts of coal dependence, including water and air pollution, which contribute to unsatisfactory living conditions in the country. It is also expected to help low-income households cope with recent increases in electricity tariffs by improving access to credit through commercial banks.

Mmakgoshi Lekhethe from the National Treasury and Marie Francoise Marie-Nelly from the World Bank foresee a rise in private sector participation and job creation in the renewable energy sector stemming from this initiative.

This financial and technical assistance is viewed as crucial for addressing the electricity crisis, encouraging private sector involvement, and promoting job growth in renewable energy.