World Bank Approves $1 Bln Loan for South Africa’s Power Crisis

The World Bank has approved a $1 billion loan for South Africa, aimed at tackling the nation's escalating energy crisis, which reached its peak this year with severe electricity blackouts.

These power shortages have compelled South Africa to rely heavily on its highly polluting coal-fired power plants.

For several months, South Africa has grappled with scheduled and rolling blackouts due to difficulties in generating sufficient electricity for its population of 62 million.

Eskom, the state-run power utility, is responsible for generating roughly 80% of the country's electricity through coal-powered facilities, but these have consistently fallen short of demand due to mismanagement, corruption, and frequent breakdowns.

This energy predicament has cast a shadow over South Africa's commitment to its climate change targets. In April,

President Cyril Ramaphosa hinted at potential delays in the shutdown of some coal stations due to electricity supply challenges.

"The loan endorses a significant and strategic response to South Africa’s ongoing energy crisis and the country’s goal of transitioning to a just and low-carbon economy," the World Bank stated.

Although Africa contributes the least to global climate change, it is the continent most profoundly affected by it.

South Africa, as the most advanced African economy, ranks as the world's 16th-largest emitter of greenhouse gases overall. On a per capita basis, it stands 45th based on 2019 data, according to Climate Watch.

The South African government has emphasized the need for nearly $80 billion over the next five years to finance its shift towards greener energy sources.

Previously, it secured a $439.5 million loan from the World Bank to transform a former power station into a renewable energy provider.

The case of the Komati power station, decommissioned last year, illustrates the pressing financial requirements of developing nations as they strive to embrace cleaner energy sources in alignment with climate change objectives.

There is an increasing call for the World Bank to step up its financial support to African countries confronting climate change and various associated challenges.