The French Development Agency (AFD) has agreed to provide State-owned Transnet with a €300-million, or R6-billion, loan to help achieve its decarbonisation objectives.

Transnet and the AFD on the sidelines of the G20 Summit last week announced a major initiative to accelerate the State-owned enterprise’s transition toward net-zero emissions.

“The funding package from the AFD will assist us in revitalising our infrastructure, while supporting the clean energy initiatives under the capital investment programme.

“In addition, this initiative will contribute significantly to supporting Transnet’s decarbonisation journey, while actively exploring the company’s strategic role and potential opportunities within the green hydrogen value chain,” says Transnet Group CE Michelle Phillips.

In a joint media release, the parties explain that, as a sustainability-linked loan, disbursements will be tied to progress on strategic targets.

These include diversifying into transition minerals and increasing the use and purchase of 300 GWh/y of renewable electricity – equivalent to 20% of Transnet’s electricity needs.

They explain that the French contribution will also aim to promote a shift from road transport to rail, including the rehabilitation of 550 km of railway.

It will participate in the modernisation of port infrastructure, strengthening service quality, reliability, competitiveness and overall attractiveness across Transnet’s network, the release notes.

“Transnet is a long-standing partner of the AFD and is a key actor in South Africa’s low-carbon transition. Our support will enable Transnet to pursue opportunities that will emerge from the green hydrogen economy, contribute to the modernisation of its operations and reduce its environmental footprint,” says AFD CEO Rémy Rioux.

This prospective loan to Transnet forms part of France’s contribution to the Just Energy Transition Partnership (JETP), which the AFD has been involved in implementing since 2021, and fulfils France’s €1-billion commitment announced at COP26 in support of South Africa’s just energy transition.

The parties point out that, through a €7-million, or R140-million, grant from the EU, the AFD will assist Transnet in advancing its green hydrogen strategy, a cornerstone of its decarbonisation pathway, across key sectors including ports, rail, pipelines, and facilities.

The funding will support key studies, impact assessments, pilot projects and technical assistance that will refine Transnet’s green hydrogen roadmap and accelerate the scale-up of low-carbon hydrogen initiatives across South Africa.

“Through our investment strategy Global Gateway, the EU is supporting concrete investments in South Africa’s green hydrogen economy. Investments that cut emissions and create high-quality jobs.

“With its central role in rail, ports and pipelines, Transnet is essential to building a credible and scalable hydrogen ecosystem. This partnership will help deliver the expertise and infrastructure needed for South Africa’s 2050 net-zero goals,” says EU Commissioner for International Partnerships Jozef Síkela.