Transnet has secured a €300m (about R5.8bn) loan from Agence française de développement (AFD) to support efforts to decarbonise South Africa’s freight sector and improve operational efficiency.
Source: Supplied | From left to right: Ambassador of France to South Africa, Lesotho and Malawi, His Excellency David Martinon, AFD’s Regional Director for Southern Africa, Marie-Hélène Loison and Transnet Group Chief Executive, Michelle Phillips.
The agreement forms part of France’s contribution to Just Energy Transition Partnership (JETP), aimed at supporting the country’s transition to a low-carbon economy.
Funding targets rail, ports and energy transition
The loan will fund Transnet’s Freight Decarbonisation and Corporate Sustainability Programme, which focuses on improving operational performance while reducing carbon intensity across rail and port operations.
“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. This funding will assist in achieving these objectives by enhancing energy efficiency and accelerate reforms,” said Michelle Phillips, Group Chief Executive, Transnet.
Milestones linked to funding disbursement
Disbursement of the loan is conditional on Transnet meeting a series of agreed milestones, including:
• Rehabilitation of 550km of rail along key freight corridors to improve reliability and shift cargo from road to rail
• Expansion into green hydrogen and transition minerals logistics as coal volumes decline
• Preparation for the procurement of 30MW of renewable energy
• Strengthening environmental, social and governance (ESG) capacity
These measures are intended to reduce emissions intensity, improve service delivery and strengthen climate resilience across core freight corridors.
Flexible funding structure
Unlike traditional project-based financing, the agreement allows Transnet to allocate funds across a broader programme, giving the company flexibility to respond to operational needs.
AFD said the structure supports both economic competitiveness and decarbonisation goals.
“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 minerals export corridors are a demonstration that South Africa's economic competitiveness and decarbonisation goals are inseparable,” said Marie-Hélène Loison, AFD’s regional director for Southern Africa.
The agreement builds on a relationship between Transnet and AFD dating back to 2009, including financing for the expansion of the Cape Town Container Terminal.
