European Investment Bank funds for renewable energy and energy efficiency projects across South Africa

The European Investment Bank (EIB) today agreed to provide a EUR 40m loan to FirstRand Bank to promote energy efficiency and renewable energy projects across South Africa. The package marks the first dedicated energy efficiency loan in South Africa made by the EIB. The funding will enhance South Africa’s contribution to combating climate change and facilitate economic development through improving the reliability of electricity supply in the country.

“This loan is part of the European Investment Bank’s continued strong commitment to promoting economic development across South Africa. Working closely with FirstRand Bank to increase electricity generation capacity and promote use of renewable energy will make a key contribution to sustainable growth in the country” highlighted Plutarchos Sakellaris, EIB Vice-President responsible for activities in South Africa.

“FirstRand welcomes the EIB’s significant contribution and looks forward to sourcing energy efficiency and renewable energy projects that can provide power for South Africans and help reduce greenhouse gas emissions using EIB funding” added Sizwe Nxasana, Chief Executive Officer, FirstRand Bank.

The loan will finance investments in a range of climate change mitigation activities. The total investment estimate of the current pipeline of eligible projects is EUR 100 million, to which EIB would contribute 40%. Specific focus will be on industrial cogeneration, but projects are also likely to include support for renewable energy schemes, waste or landfill gas for heat and power generation, and energy efficiency installations in residential, public or commercial buildings.

The sub-projects will be identified and individual loans structured by Rand Merchant Bank (RMB), the investment banking division of FirstRand Bank Limited.

Potential projects currently under consideration by RMB include the development, construction and operation of two 3 MW mini-hydro power facilities at existing dams in rural areas of South Africa. These are estimated to reduce CO2 emissions by a total of 30,000 tons a year.

The loan is part of the European Investment Bank’s specific mandate for funding in the Republic of South Africa. The EIB works closely with the South African authorities, public bodies, private companies and the financial sector to facilitate investment in infrastructure projects of public interest (including municipal infrastructure, power and water supply) and private sector support.

This is the fourth financial package provided to South Africa in 2009 by the European Investment Bank and follows both the EIB’s specific RSA objectives and wider European Union policy goals concerning energy efficiency and contributing to reliable energy supply crucial for economic development.

Previous assistance in 2009 has included support for South African small and medium sized companies through the Industrial Development Corporation (IDC), for municipal infrastructure investments, especially to less developed communities, through Development Bank of Southern Africa, and facilitating the upgrade and extension of two key toll roads in northern South Africa.