JOHANNESBURG — The US Export-Import Bank is to sign a $2 billion (1.6 billion-euro) deal with South Africa to fund green energy projects in the electricity-short country, the bank's chief said Monday.
"We are signing an agreement tomorrow for $2 billion for renewable energy exports from the US to South Africa," the bank's president Fred Hochberg told reporters.
The 18-year term loan deal will be tied to specific US exports of both goods and services and will ensure diversity of power supplies.
"South Africa has one of the most forward-reaching energy policies in terms of diversity in power," he said on the sidelines of a business forum between US and South African business executives.
"We are signing tomorrow and it goes into effect immediately," he added.
"We have been an active financier of solar and wind... energy all over the world," he said.
"In fact last year we were the largest single financier of solar power in India, we would like to do the same thing here."
The agreement is to be signed on Tuesday during a visit by US Secretary of State Hillary Clinton, as part of her tour of Africa.
"It's a declaration of intent between Ex-Im Bank and the Industrial Development Corporation of South Africa to consider a financing option for up to $2 billion in credit in support of South Africa's energy sector," Charles Randolph, the US embassy energy officer told AFP.
South Africa plans to double its power supply by adding more than 50,000 megawatts of electricity to the grid.
Authorities hope to generate 3,725 megawatts of power from "green" energy sources, as part of a $127 billion-scheme to overhaul the national electricity system.
Over the next eight years renewable energy will comprise 42 percent and nuclear power 23 percent of the national grid, said South Africa's Energy Minister Dipuo Peters at the forum.
"It is important that you assist in translating these projects into reality," she told investors. "South Africa is a stepping stone to Africa."
In addition to funding US exports, the bank finances a third of additional local civil costs incurred in setting up the power plants, said Hochberg.
Some of the companies to be part of the deal include GE, Siemens and other clean energy firms.
Clinton's tour to South Africa is aimed at boosting trade and business ties between the two countries.
South Africa is the largest US trade partner in the region at $22 billion annual trade between them, Clinton said Monday.
The United States is the third largest source of foreign direct investment in Africa's biggest economy.
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