Agence Française de Développement (AFD) has approved another €400-million policy-based loan to support South Africa’s Just Energy Transition (JET), increasing its approvals to €700-million out of the €1-billion it pledged to South Africa at COP26 in Glasgow in 2021.
The loan is described as the largest-ever on the AFD's balance sheet and is said to build on the €300-million public policy loan provided by AFD in 2022.
It is linked to a set of policy reforms aimed at supporting South Africa’s JET Investment Plan, which seeks to facilitate a shift from coal to renewable energy while cushioning workers and communities reliant on the coal value chain.
The loan will be disbursed in equal €200-million tranches in 2025 and 2026.
It has a 15-year maturity with a two-year grace period and is priced using an interest rate linked to the six-month EURIBOR plus 1.66%.
AFD regional director for Southern Africa and country director for South Africa Audrey Rojkoff said that AFD was working together with the JET partners to strike a balance between South Africa’s energy needs and its climate commitments.
“Importantly, we are engaged in addressing the complexity around ensuring that the transition benefits all segments of society with careful planning and implementation,” Rojkoff said in a statement.
National Treasury asset and liability management head Mmakgoshi Lekhethe added that the partnership with the AFD presented an opportunity for South Africa to make progress in addressing practical issues of jobs, skills, social support, and governance.
“National Treasury will continue working through the intergovernmental system to integrate JET into our fiscal policy choices,” Lekhethe said.
Edited by: Creamer Media Reporter
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