World Bank grants South Africa $1bn loan for energy reform

The World Bank said it will support South Africa’s transition to using cleaner forms of energy with a $1 billion loan.

The funding will help facilitate “restructuring of the power sector” through the unbundling of state-owned utility Eskom Holdings SOC Ltd., the lender said in a statement on Wednesday. “It supports the opening of the power market and aims at improving Eskom’s efficiency by redirecting its resources toward investments in transmission and maintenance of existing power plants.”

South Africa, which depends on coal to generate most of its electricity, has been hit by regular power cuts because Eskom’s plants are old and unreliable.

Splitting the utility into separate generation, transmission and distribution businesses is aimed at restoring the company to profitability and adding more private producers to the grid.

The World Bank said it will also support “a low-carbon transition by encouraging private investment in renewable energy, including by households and small businesses, and strengthening carbon pricing instruments.”