SA secures R19bn World Bank loan for energy transition

The World Bank announced on Wednesday that it would “support SA’s efforts to promote long-term energy security and a low carbon transition” with a $1bn (R19bn) Development Policy Loan.

The bank said the loan would support restructuring of the power sector through the unbundling of Eskom, the opening of the power market, and the redirecting of Eskom’s resources towards investments in transmission and maintenance of existing power plants.

It will also go towards “low carbon transition by encouraging private investment in renewable energy ... and strengthening carbon pricing instruments”.

Mmakgoshi Lekhethe, deputy-director general for asset and liability management at the National Treasury, said in a statement issued by the bank that the loan comes at a crucial time for SA.

“It will provide much needed fiscal and technical support, enabling us to pursue our policy priorities in the energy sector including easing the electricity crisis in the long term, stimulating private sector engagement and creating jobs in the renewables space,” Lekhethe said.

According to the World Bank, through the loan, poor households and businesses — particularly women and black women-owned businesses — will be supported through access to credit by commercial banks to enable them to invest in solar technology.

Electricity minister Kgosientsho Ramokgopa has for months been advocating for a facility to be introduced that would allow poorer households and businesses to also benefit from the incentives Treasury has put in place to encourage private investment in rooftop solar.

The operation supported by this loan was a collaborative effort between the SA government, the World Bank and three partners — the African Development Bank, the German KfW Development Bank, and the government of Canada — the World Bank said.

It will also see the SA government “receive technical assistance to identify future reforms necessary to manage the social costs associated with the decommissioning of coal-fired power”.

“We are pleased to support SA’s government, which has taken decisive reforms to address the challenges posed by the energy crisis. These reforms will benefit the people of SA — particularly the most vulnerable households, — the economy, the environment, and advance the energy transition,” said Marie Francoise Marie-Nelly, World Bank country director for SA.

erasmusd@businesslive.co.za