SOUTH AFRICA: State rail, port and pipeline operator Transnet and French development agency AFD has signed a €300m loan agreement to support the Transnet Freight Decarbonisation & Corporate Sustainability Programme to strengthen efficiency and sustainability and enable a transition to a low-carbon operating model.
Unlike traditional project finance, where loan proceeds are allocated to specific investments, Transnet retains the flexibility to deploy the funds across a widely defined programme, allowing it to respond dynamically to its evolving business needs.
Disbursements are conditional on Transnet achieving certain mutually-agreed
milestones, including:
- rehabilitation of 550 km of the Cape and Container corridors to improve reliability and enabling a shift of freight from road to lower‑carbon rail;
- exploring green hydrogen and transition minerals logistics to replace anticipated declines in coal volumes;
- preparation for procurement of 30 MW of renewable energy, to support the pathway to net-zero emissions;
- strengthening of ESG capacities.
‘Transnet remains committed to modernising its rail and port infrastructure and operations to improve service quality, reliability and competitiveness, while advancing sustainable growth as part of its Reinvent for Growth strategy’, said Transnet Group Chief Executive Michelle Phillips on May 4. ‘This funding will assist in achieving these objectives by enhancing energy efficiency and accelerate reforms.’
The loan forms part of France’s contribution to South Africa’s Just Energy Transition Partnership, implemented by AFD since 2021, and fulfils France’s €1bn commitment to the JETP announced at COP26.
Marie-hélène Loison, AFD’s Regional Director for Southern Africa, said ‘we are particularly pleased with this operation, as it reflects the shared priorities of both institutions. Transnet is a strategic actor in South Africa’s low-carbon transition and it is a key enabler to the competitiveness of the economy. The investments in freight rail recovery, port modernisation and transition mineral export corridors are a demonstration that South Africa’s economic competitiveness and decarbonisation goals are inseparable.’