The World Bank has approved a US$1bn Development Policy Loan (DPL) to help the government of South Africa restructure its power sector to promote long-term energy security and a low carbon transition. This is the third policy loan extended since the conclusion of a Just Energy Transition Partnership (JETP) with the French and German development banks, AFD and KfW.
Restructuring South Africa's power sector includes opening the power market, unbundling the national power utility Eskom, and improving the company's efficiency by focusing its investments in power plant maintenance and in the power grid. The loan will also help support a low-carbon transition by promoting private investment in renewable energy, including by households and small companies, and strengthening carbon pricing instruments. South Africa has been facing an ongoing energy crisis for years, due to technical problems at existing coal-fired power plants and delays in the commissioning of new power plants. In 2022, power cuts ("load shedding") averaged 8 hours a day, costing around 2-3% of GDP.
In addition, the Department of Forestry, Fisheries and the Environment of South Africa has granted an environmental authorisation for Karpowership’s Richards Bay environmental-impact assessment (EIA) application. Karpowership, which was named a preferred bidder in the Risk Mitigation Independent Power Producer Procurement Programme (RMIPPPP) in 2021, aims to install three ship-based floating gas-to-power projects on the South African coast, in the ports of Richards Bay, Saldanha Bay and Ngqura. Each power barge would have an installed capacity of 320 to 450 MW.
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