Standard Bank Group Ltd. (SBK.JO), one of Africa's largest lenders by assets, said Tuesday that it signed a roughly $2 billion financing agreement with the Industrial & Commercial Bank of China Ltd. (601398.SH) to jointly fund renewable energy projects in South Africa.
Johannesburg-based Standard Bank has already provided financing for a number of wind and solar projects. The agreement with ICBC, which is a 20% shareholder in Standard Bank, will expand its role in the sector.
South Africa is holding a series of tenders primarily for wind and solar energy projects. The country wants to supplement its energy mix, which is still heavily reliant on aging coal-fired power stations. By 2030, the country aims to lift renewables to 8% of energy output, from less than 1% now.
The focus on renewable energy in South Africa comes as state power company Eskom Holdings Ltd. struggles to finance the expansion of its coal-power stations and meet growing demand.
So far two rounds of the renewable energy tenders have been completed and the winners of the third round are due to be announced soon, Standard Bank said. The bank said the 20 billion rand ($2.18 billion) funding support agreement would be jointly run by the two banks and used to provide debt financing on a project-by-project basis.
"ICBC is...certainly interested in raising awareness of the South African investment opportunity among Chinese suppliers as potential sources of contracting capability," said ICBC Chairman Jiang Jianqing.
"The objective of this partnership is to facilitate the entry of investors into South Africa, and ICBC is excited about the opportunity to co-lend into renewable energy with Standard Bank."
Source: Dow Jones Newswires