Godongwana says R19 billion loan from World Bank will help deal with energy crisis

The World Bank gave South Africa a R19 billion loan. File Picture: Reuters

The World Bank gave South Africa a R19 billion loan. File Picture: Reuters

Published Dec 15, 2023


Minister of Finance Enoch Godongwana has defended the $1 billion (R19 billion) loan government received from the World Bank to reform the energy sector and said it was a sovereign loan that did not require collateral or a guarantee.

He said the World Bank gave South Africa the loan based on the number of reforms it has completed.

He said the repayment of the loan will start in 2029 and end in 2038. There is a five-year grace period before South Africa starts repaying the loan.

The World Bank said the loan was to help South Africa reform its energy sector.

Minister of Electricity Kgosientsho Ramokgopa has said Stage 6 of load shedding costs the economy R1 billion a day.

Load shedding was said to have cost 800,000 jobs last year, with many companies shutting down.

Government has said that while it is committed to clean energy, it will delay the decommissioning of coal-fired power stations.

President Cyril Ramaphosa has also said they will not rush to decommission power stations.

Ramokgopa told the media a few months ago that South Africa would not transition into darkness.

Godongwana said the R19bn loan has to do with electricity challenges.

“The instrument used for this loan is a Development Policy Operation (DPO), which means this loan is provided to South Africa on the strength of a completed set of policies and reforms. The institutional reforms that are referenced on the DPO fall under climate change and the electricity sector, mostly covered under Necom (the National Energy Crisis Committee),” said Godongwana, who was replying to a written parliamentary question from DA MP Samantha Graham-Mare.

“No, this type of funding is categorised as budget support loans aimed to support South Africa’s economic recovery, inclusive and accelerated growth, and commitment to the just transition to a low-carbon and resilient economy. The loan will take effect within 90 days of signing the loan agreement,” he added.

Godongwana said the repayment of the loan will be over a period of almost 10 years. Repayments will be made twice a year, during March and September.

However, the repayment will commence in 2029.