The facility was designed to provide a viable solution to one of the main challenges faced by independent power producers operating in Africa, namely the requirement to provide liquidity guarantees to lenders, says the statement sent to PANA.
The German Federal Ministry for Economic Cooperation and Development (Bmz) will finance the installation through KfW for 32.9 million euros.
The goal is to enable small and medium-sized renewable energy projects in Africa to reach financial close by meeting the liquidity needs of lenders to finance such projects.
The launch of the new facility is timely, with emerging countries attracting record investments in the renewable energy sector.
The International Energy Agency (IEA) forecasts a growth of 73% (24.4 GW) in renewable energy capacity in sub-Saharan Africa by 2022. In addition, medium-sized projects are considered as a potential solution to Africa's energy deficit. implement and able to meet energy needs at the source. Nevertheless, such projects face a major challenge: access to the types of collateral needed to achieve financial closure. Through this facility, immediate cash will be injected to allow Independent Power Producers (IPPs) to stay afloat in the event of late payments beyond the grace periods granted in the Power Purchase Agreement.
The Personal Representative of the German Chancellor for Africa, Bmz Günther Nooke, noted that the Regional Facility for Liquidity Support (RLSF) aims to address a major challenge in financing renewable energy and mitigation projects for investments in the private sector. This is a commitment by Germany to support the objectives of the Renewable Energy Initiative for Africa (IAER) by providing funding for this innovative instrument.
The RLSF is designed to help PEIs realize renewable energy projects in Africa by obtaining the necessary liquidity in case of late payments from their buyer (often a public entity). The establishment will provide an immediate cash collateral, backed by a commercial bank guarantee that will open a letter of credit support for Pei's profits. The amount provided will allow the IEPs to operate and honor the debt for up to six months. In addition, unlike most letters of credit for IEPs (usually 12 months), the institution is designed to stay in place for many years.

Source: Témoignages.re