The NDB will provide the loan to the DBSA without a sovereign guarantee.
The loan will be in the form of a two-step loan and will be on-lent to the DBSA’s identified subprojects within the wind, solar and biomass energy sectors, in particular.
The Greenhouse Gas Emissions Reduction and Energy Sector Development project is designed to support renewable energy projects in South Africa and help the economy shift to a more sustainable energy path through structural transformation of the energy sector with emerging renewable technologies.
The objective of the project is to facilitate investments in renewable energy that will contribute to the power generation mix and reduce carbon dioxide (CO2) emissions in South Africa, in line with the South African government’s Integrated Resource Plan and its target of reducing greenhouse-gas emissions as articulated in the National Development Plan 2030.
According to a statement issued on Monday, the project will bring significant developmental impacts through the subprojects, particularly related to environmental and social benefits from the reduction in CO2 emissions, the increase in generation capacity from renewable energy sources, and the increase in the efficiency of the energy sector in South Africa.
The project is also expected to contribute to unlocking private sector investment and increasing the availability of long-term funds for projects in the energy sector in the country.
The loan agreement was signed by NDB VP and COO Xian Zhu and DBSA CEO Patrick Dlamini during the fourth yearly meeting of the NDB in South Africa.