World Bank approves USD1 billion loan for South Africa’s energy reforms

The World Bank has sanctioned a development policy loan worth USD1 billion with an aim to bolster South Africa’s energy sector, advance its low-carbon transition, and support the ongoing electricity market reforms in the country.

The funding, structured as a development policy loan, will be channelled to the National Treasury. This funding marks the third policy loan post the establishment of the Just Energy Transition Partnership with several developed countries. Notable contributions from the French and German development banks, Agence française de développement and Kreditanstalt für Wiederaufbau (KfW) respectively, in November 2022, exemplify the collaborative international effort to bolster South Africa’s energy reforms. The loan, a joint endeavour involving the World Bank, the African Development Bank, KfW, and the governments of Canada and South Africa, aligns with the nation’s development priorities outlined in the Energy Action Plan. This plan addresses critical issues such as load-shedding and the energy transition, emphasising a shift toward sustainable energy practices. The loan’s objectives encompass the restructuring of the power sector through Eskom’s unbundling and the redirection of resources towards vital investments in transmission and plant maintenance.