The European Investment Bank has announced that it is negotiating to finance South Africa's port and freight rail infrastructure improvements in its first contribution to the decarbonization deal, known as the Just Energy Transition Partnership.
The EIB did not disclose the size of the loan in a response to questions on Thursday, but said it was part of a 1 billion euro ($1.07 billion) commitment to JETP. The deal to support South Africa's transition away from coal comprises $8.8 billion in climate finance pledged by the European Union through the EIB, France, Germany, the United States, the United Kingdom, the Netherlands and Denmark.
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“This potential investment is aimed at supporting South Africa’s ambitious decarbonization efforts under the JETP, while driving economic growth through more efficient and reliable freight transport.” EIB stated.
The loan negotiations come as shipments of South Africa's two biggest exports, coal and iron ore, are restricted by an unreliable freight rail system, and fruit destined for overseas markets is shipped to some of the world's most inefficient ports. It was carried out in a state of decay.
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The bank said the EIB loan was made at “favorable interest rates” and could be supplemented with subsidies from the European Commission.
National Treasury and its state-run logistics company Transnet did not respond to requests for comment.
The JETP, agreed in 2021, is seen as a prototype for similar agreements between some of the world's richest countries and coal-dependent countries such as Indonesia and Vietnam.
South Africa, which relies on coal for more than 80% of its electricity, also aims to increase renewable energy production, expand the grid and develop electric vehicle and green hydrogen industries.
In November and December, in a separate agreement with JETP, the EIB loaned the state-owned Southern African Development Bank 300 million euros ($322 million) to help finance private renewable energy projects in South Africa. Agreed.
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