The Government of South Africa has secured a $1 billion Development Policy Loan (DPL) from international financial institution the World Bank. The funding is aimed at addressing the ongoing energy crisis in the country and will support the implementation of a long-term strategy for energy security and decarbonization.
Approved by the board of the World Bank, the funding will support the separation of state utility Eskom into three subsidiaries – pledged by the Government in 2019 -, with the aim to enhance efficiency.
This will enable optimization of existing assets and the construction of priority infrastructure. The funding will also support South Africa in its transition to renewable energy by encouraging private investment across the power industry and strengthening carbon pricing mechanisms.
Mmakgoshi Lekhethe, Deputy-Director General: Asset and Liability Management, of the National Treasury of South Africa, said that, “This operation comes at a crucial time for South Africa as 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.”
According to Marie Francoise Marie-Nelly, World Bank Country Director for South Africa, the loan will be instrumental in protecting the most vulnerable households from recent increases in electricity tariffs while supporting women-led business to invest in solar projects.