South Africa and Rwanda receive AfDB energy finance
AFRICAN LAW BUSINESS / 12 OCTOBER 2018 - 19.07 / ANDREW MIZNER
The African Development Bank has provided nearly USD 500 million in loans to help South Africa and Rwanda improve their power grids.
Lack of power is one of the main obstacles to Africa’s industrialisation and economic development, and the African Development Bank (AfDB) has made improving access to electricity a priority as part of its ‘High 5s’ programme.
Last month it reinforced that commitment with loans to help both South Africa and Rwanda with their grids.
In South Africa, the bank has loaned USD 217.9 million (ZAR 2.886 billion) to beleaguered state electricity provider Eskom, towards the upgrade of its network in the KwaZulu-Natal and Mpumalanga provinces.
That includes USD 25 million from the bank’s ‘Africa Growing Together Fund’, a joint project with the People’s Bank of China.
The Eskom transmission improvement project (ETIP) will add 555 km of power lines and upgrades for infrastructure across both provinces and is part of South Africa’s national development plan 2030.
It follows ZAR 6.6 billion in funding for two South African wind farm projects, which was secured in June.
Eskom has been plagued by problems in recent years, resorting to rolling blackouts in order to keep the system in operation, and South Africa’s power grid is in desperate need of investment.
In Rwanda, the bank has approved a loan of USD 266 million towards an expansion project for the electricity supply system, which it said is “part of a drive to transform the country into an export-oriented economy”.
The USD 266 million consists of a USD 192 million loan from the bank and USD 74 million in credit from its African Development Fund, over three years, and will go into the scaling up electricity access program (SEAP II).
AfDB vice president for power, energy, climate change and green growth, Amadou Hott, said in a statement that “the approved programme will support the government to add over 193,000 new on-grid and over 124,000 off-grid connections”.
The programme will construct 7,317 km of low voltage power lines and 795 km of medium voltage, which will improve the power network across the country and provide power to communities which have not had access to the grid until now. Access to power in Rwanda has more than doubled in seven years, from 18% to 44%.
The AfDB’s involvement in the project goes bank five years to USD 46 million which it invested in the first stage of the project in 2013. Rwanda’s energy sector strategy plan has a USD 3.3 billion budget.
The news of the bank’s support for electricity supply in South Africa and Rwanda came around the same time that Italian oil and gas company Eni unveiled a renewable energy partnership for Africa with the United Nations Development Programme (UNDP), while July saw financing closedon a Senegalese wind farm.
Meanwhile, in Zimbabwe, a Chinese corporation is constructing a USD 1.4 billion thermal power station complex. China is at the forefront of financial support for Africa’s energy sector – the amount of money lent to African projects almost trebled last year.
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