The South African government has secured loan agreements with European countries, France and Germany to the tune of R10.7 billion (€600 million).
The loan agreements or deals with France and Germany will assist South Africa in its efforts to shift from coal and compound its reliance on cleaner energy.
As per information filtering through to BusienssTech Africa, each of the European nations has committed R5.4 billion (€300 million) in concessional financing through the French and German public development banks, the AFD, and KfW, respectively.
The loans acquired by South Africa have been provided directly through the National Treasury department.
Ismail Momoniat, acting director-general of the South African National Treasury welcomed the loans from AFD and KfW, citing that it will assist in addressing the challenges associated with financing the implementation of the country’s just energy transition to a low-carbon.
MoneyWeb reports that Momoniat said the loans, offered at below market rate, contribute to the government’s efforts to mitigate rising government debt costs.
The loan agreement announcement comes days after President Cyril Ramaphosa handed down South Africa’s R1.5 trillion five-year Just Energy Transition Investment Plan at the COP27 climate summit currently being held in Sharm El Sheik in Egypt.
“France and Germany’s loan agreement is significant for South Africa, which is one of the 15 top carbon-emitting countries in the world. The country remains largely reliant on coal to produce the bulk of its electricity supply,” reports the outlet.
Speaking about the financing, Andreas Peschke, German ambassador to South Africa, said the agreements represent a ‘very concrete implementation of the JEPT’.
On behalf of KfW Development Bank, director for South Africa Silke Stadtmann, also hailed the agreement and welcomed South Africa’s commitment to reducing electricity generation from coal.
“This is an important step in achieving the country’s climate goals. As a long-term partner of South Africa, we support these efforts not only with concessional loans for necessary investments and grants for a just energy transition but also with comprehensive studies on energy sector reform,” Stadtmann said.
