South Africa's President today criticized the cost of international aid for the energy transition, saying the cost of loans is too high for most countries trying to diversify energy sources.

"Currently, multilateral aid is out of reach for most of the world's population due to risk-averse lending policies and have too onerous costs and conditions," Cyril Ramaphosa said in a speech at the United Nations Conference of the Parties (COP 27), taking place in Sharm el-Sheikh, Egypt.

"Multilateral development banks must be reformed to meet the needs of developing economies for sustainable development and climate resilience," he said, calling for "international equity" and a "just and inclusive" transition.

The President of South Africa, one of the world's most polluting countries struggling to finance its energy transition, criticized said that southern hemisphere countries will need more than $2 billion a year by 2030 to finance their climate action, almost half of which will come from outside investors, according to a report commissioned by the COP presidency.

Developed countries, which pledged $8.5 billion last year to help South Africa make a "just energy transition," on Monday approved the country's plan to achieve that goal.

In a joint statement issued at the beginning of COP27, the United States, European Union, United Kingdom, France and Germany announced that they had approved the "Investment Plan for a Just Energy Transition" presented last week by the South African government.

The plan estimates the "financial requirements at $98 billion over five years to begin an energy transition, which will extend over 20 years in South Africa," the statement clarifies.

The approval of the "international partners group" (IPG) countries will allow the 8.5 billion, announced last year at COP26 in Glasgow, to be released.

The funding will be "disbursed through a variety of mechanisms over a five-year period, including grants, soft loans, and investment and risk-sharing instruments," a GPI statement said.

Since the agreement in principle on "JET-P", the Partnership for a Just Energy Transition, presented as an example of cooperation to be followed in the fight against emissions in developing countries, negotiations have been delicate for its implementation.

South Africa gets 80% of its electricity from coal, a mainstay of the economy that employs nearly 100,000 people, but the energy transition means closing several mines by the end of 2030.

The heavily indebted state-owned company Eskom is unable to produce enough electricity with aging facilities and the country is affected by continuous blackouts. (Lusa)