The Southern African Power Pool (SAPP) and investment advisers Climate Fund Managers on Tuesday launched a new $1.3 billion target fund to build cross-border and local electricity infrastructure, officials said.

The Regional Transmission Infrastructure Financing Facility (RTIFF) starts with $20 million in commitments from SAPP, and aims for a first close of $500 million in 2025.

Finance will be raised from public and private sector investors locally and internationally, a joint statement said.

Despite an abundance of energy sources in Africa, a lack of connections between countries has hampered integration and trade among SAPP's 12 members, which include regional economic heavyweight SA and top copper exporter Zambia.

“Access to capital is the number one barrier facing developers of energy transmission infrastructure,” Victor Mapani, chairperson of the SAPP executive committee, said.

“RTIFF dismantles this by enabling the private sector to work alongside public sector utilities to roll out new transmission lines at scale,” he added in a statement.

The facility will have a fund life of between 20 and 25 years and is expected to reach a final close of $1.3 billion within two years.

A push towards renewable energy, including wind, solar and battery storage, has highlighted the dearth of high-voltage connections across the region where projects, often in remote areas, are unable to connect to national grids.

SA's debt-ridden power utility Eskom, which requires around 350 billion rand ($18.41 billion) over the next decade to upgrade its transmission network, is wooing the private sector for investment to overcome the country’s worst electricity shortages on record.

“The lack of investment in grid infrastructure is one of the reasons for ongoing blackouts in many parts of Southern Africa,” Amit Mohan, head of private credit at CFM said in the statement.

Reuters