South Africa is currently in discussions with the World Bank for a potential $1 billion loan to aid in revitalizing its energy sector. Marie Francoise Marie-Nelly, the World Bank's director for South Africa, has confirmed that this loan is under consideration. Notably, the loan is intended for the South African government, rather than the state utility Eskom. While a specific timeframe wasn't provided, it is expected to be finalized soon.

South Africa has been grappling with severe power shortages that have had a significant impact on its economy. In 2022, the country endured over 200 days of power cuts, marking it as one of the worst years for blackouts in its history. This crisis has intensified in 2023, largely due to the frequent breakdowns of Eskom's aging coal-fired plants.

The proposed World Bank loan is not solely aimed at helping South Africa transition away from coal but also at ensuring a just transition. The loan will support critical reforms and focus on addressing transmission issues, a key obstacle to bringing in new capacity, particularly from the private sector.

South Africa is committed to absorbing a significant portion of Eskom's debt, equivalent to $13.4 billion. This commitment comes with conditions, including a restriction on Eskom from incurring new debt for three years without approval from the country's finance minister. Furthermore, the government plans to divide Eskom into three subsidiaries: transmission, generation, and distribution. The transmission subsidiary is expected to become operational by 2025.

In addition to aiding South Africa in its transition from coal, the World Bank loan will ensure a just transition that protects vulnerable populations from adverse effects. The government is also exploring broader climate-related initiatives, including the implementation of a carbon tax. In November 2022, the World Bank approved $497 million in financing for the decommissioning and repurposing of one of Eskom's coal-fired power plants.