The funding will assist the company in revitalizing its infrastructure while supporting the clean energy initiatives under the capital investment program.
by Blue Africa News
South Africa’s logistics infrastructure company, Transnet, has received a commitment for a R6 billion (€300 million) loan from the French Development Agency (AFD), with support from the European Union, to accelerate the company’s decarbonisation program and broader sustainability objectives.
The deal was reached during the recently concluded G20 Summit hosted by South Africa, with the funding expected to go a long way in supporting Transnet to accelerate its transition toward net-zero emissions.
The funding from AFD, according to Transnet Group’s Chief Executive, Michelle Phillips will assist the company in revitalizing its infrastructure while supporting the clean energy initiatives under the capital investment program.
“In addition, this initiative will contribute significantly to supporting Transnet’s decarbonisation journey while actively exploring the company’s strategic role and potential opportunities within the green hydrogen value chain,” she added.
Characterized as a “sustainability-linked loan,” disbursements will be tied to progress on strategic targets, including diversifying into transition minerals and increasing the use and purchase of 300 gigawatt-hour (GWh) of renewable electricity per year, which equates to 20 % of Transnet’s electricity needs.
More significantly, the funding will promote the shift from road transport to rail, including the rehabilitation of 550 km of railway in South Africa, besides playing a major role in the modernization of port infrastructure, strengthening service quality, reliability, competitiveness, and overall attractiveness across Transnet’s network.
The prospective AFD loan forms part of France’s contribution to the Just Energy Transition Partnership (JETP) initiative, which AFD has been implementing in South Africa since 2021, fulfilling Paris’ €1 billion commitment announced at COP26 in support of South Africa’s just energy transition.
Rémy Rioux, AFD’s CEO termed Transnet as their long-standing partner, and a key actor in South Africa’s low carbon transition. “Our support will enable Transnet to pursue opportunities that will emerge from the green hydrogen economy, contribute to the modernisation of its operations and reduce its environmental footprint,” noted the CEO.
On the other hand, the EU through its investment strategy Global Gateway is supporting concrete investments in South Africa’s green hydrogen economy.
South Africa’s hydrogen society roadmap targets four outcomes, revolving around the creation of an export market for South African Green hydrogen and ammonia, green the power generation sector, decarbonizing the transport and heavy industry sector and locally manufacturing green hydrogen supply chain components.
Oliver Ochieng, Blue Africa News