By Ebi Kesiena
The World Bank said on Thursday that its Board has approved a $1 billion loan to help South Africa reform its energy sector, as the country tries to overcome regular power cuts that have curbed economic growth.
In a statement, the bank noted that it wants to support the country’s reforms to split struggling power firm Eskom and to transition to a low carbon economy.
World Bank’s Director for South Africa, Marie Francoise Marie-Nelly, had told the media last month that the loan was under discussion and could come soon.
In the statement, Marie-Nelly said reforms the government had launched would benefit the people of South Africa – particularly the most vulnerable households – the economy, the environment, and advance the energy transition.
Eskom’s coal-fired power stations routinely break down, leading to outages of up to 10 hours a day.
According to a September analysis by Reuters, several plants violated government emissions regulations early this year.
Using its Development Policy Loan, the World Bank said it would reduce the use of coal for power generation and, therefore, reduce water and air pollution.
However, South Africa’s government has pledged to split Eskom into three subsidiaries transmission, generation and distribution. In February, it agreed to take on 254 billion rand ($13.3 billion) of Eskom’s debt, more than half its total debt, which was at risk of default.
As the country battles to improve its power sector, the world bank loan will go a long way to stabilize the sector.