South Africa may get $1 billion loan from World Bank to tackle power crisis

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Companies The World Bank Group Follow MARRAKECH, Morocco, Oct 14 (Reuters) – The World Bank is in talks about a potential $1 billion loan to help enable South Africa to reform its energy sector, a bank official told Reuters, as the country tries to overcome record power cuts that have crippled the economy. The loan, which would be directly to the government rather than to state utility Eskom, is “under discussion”, Marie Francoise Marie-Nelly, the bank’s director for South Africa, said in an interview in Marrakech, Morocco. “It is going to come very soon,” she added, declining to specify a timeframe. South Africa is facing its worst power crisis, with Eskom’s ageing, coal-fired plants often breaking down. Rolling power cuts have crimped economic growth, while fuelling private investment in renewable energy. “It’s a policy development loan which supports critical reforms,” Marie-Nelly said of the potential World Bank funding. “There’s a particular focus on transmission, because it is a stumbling block in terms of bringing new (capacity) that is going to be built mainly by the private sector.” In February, the South African government agreed to take on over 254 billion rand ($13.4 billion) of Eskom’s debt through a debt relief scheme, subject to conditions. The main condition was that the power utility would not be able to take on any new debt for three years unless approved by the country’s finance minister. In 2019, the government pledged to split Eskom into three subsidiaries – transmission, generation and distribution. Eskom said in August that its transmission arm would not be operational until 2025. The World Bank loan would also support South Africa to make a “just transition” away from coal, to ensure vulnerable people do not suffer as a result, Marie-Nelly said. She said the government was “also looking at the broader climate agenda, including looking at the carbon tax.” In November 2022, the World Bank approved $497 million in financing to decommission and repurpose one of Eskom’s coal-fired power plants. ($1 = 18.9804 rand) Read Next MarketscategoryChina stock market regulator announces restrictions on securities lending China’s securities regulator on Saturday said it would restrict securities lending businesses and tighten scrutiny on improper regulatory arbitrage. 9:07 AM UTC Environmentcategory India to push developed nations to become ‘carbon negative’ before 2050, sources say 5:29 AM UTC Marketscategory SEC does not plan to appeal court decision on Grayscale bitcoin ETF, source says October 13, 2023 Businesscategory Exclusive: Activist hedge fund Starboard eyes Rupert Murdoch’s News Corp October 13, 2023 Reporting by Rachel Savage and Jorgelina do Rosario; Editing by Kopano Gumbi, Mark Potter and Mike Harrison Our Standards: The Thomson Reuters Trust Principles. Acquire Licensing Rights, opens new tab Rachel Savage Thomson Reuters Rachel Savage is Africa Senior Markets Correspondent at Reuters, where she covers finance and economics across Sub-Saharan Africa, from sovereign debt crises and IMF programs to foreign exchange markets and cryptocurrencies. Previously she was LGBT+ Correspondent at the Thomson Reuters Foundation for just over three years and was awarded Journalist of the Year in 2021 by the NLJGA: The Association of LGBTQ Journalists, a U.S. group. Before that, Rachel was based in Nairobi and then Lagos as an East and West Africa Correspondent for The Economist, after starting her career a decade ago as a business journalist in London. Jorgelina Do Rosario Thomson Reuters Jorgelina do Rosario is Emerging Markets Correspondent at Reuters based in London, where she covers finance and economics across developing economies, from fixed income assets and sovereign debt crises to IMF programs. Previously she was an editor and reporter in Bloomberg for over four years based in Buenos Aires, reporting on Argentina’s economy and finance. She holds a Master in Finance from Universidad Torcuato Di Tella.

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