ATI in the Power and Renewable Energy Sector - African Trade Insurance Agency

ATI in the Power and Renewable Energy Sector

Type of cover provided by ATI: Regional Liquidity Support Facility (RLSF)

Project Supported: Gigawatt Global solar PV, Burundi

Project size: 7.5MW

Risk Counterparty: The Government of Burundi and the state-owned power utility, Régie de Production et Distribution d’Eau et d’Electricité (REGIDESO)

RLSF, a joint initiative of ATI and KfW, is a revolving liquidity facility that is available to small and medium-sized renewable energy power projects in ATI member countries that have signed a Memorandum of Understanding (the RLSF MoU) with ATI.

How it works:

Two contracts are entered into,

(i) the Terms of Use Agreement and

(ii) the Stand by Letter of Credit (SBLC).

The SBLC, which is partially cash collateralized and covers an agreed number of months of REGIDESO’s payment obligations, can be drawn by the Project Company following a default by REGIDESO on its payment obligations under the Power Purchase Agreement (PPA).

The RLSF contracts are entered into between ATI, the Project Company and Absa South Africa as the LC issuing bank. Of note, there is no separate counter indemnity from the Burundian government or REGIDESO required by ATI.

The RLSF insurance provided by ATI for this project will cover the payment risk in support of partners that include the UK government-funded Renewable Energy Performance Platform (REPP), the United States International Development Finance Corporation (DFC) (formerly the Overseas Private Investment Corporation – OPIC) and the Inspired Evolution II Fund.

The 7.5MW solar project will add nearly 15% to Burundi’s total energy-generation capacity and it will provide electricity to 87,000 people and businesses placing a significant dent in the country’s energy deficit, where less than 5% of the population has access to power.

In addition to the positive impact on the climate, this project will also demonstrate that green energy can provide economic benefits as it is expected to create 300 temporary jobs during the construction phase and up to 50 permanent jobs during the facility’s 25-year operational phase. The project will have a substantial positive impact on Burundi and exemplifies the important role that the private sector, with the support of multilaterals such as ATI, has to play in boosting Africa’s electricity supply with affordable renewable energy.

QUOTE from Michael Fichtenberg, Managing Director, Gigawatt Global Burundi SA and Vice President of Finance and Business Development of Gigawatt Global Cooperation,

“We accomplished this pioneering project together with supporters from across the entire development spectrum, including innovative financial products being deployed for the first time with this project,” he said, citing the support of the ATI’s innovative RLSF.

“We believe this demonstrates how solar power can be implemented in other developing markets while decreasing dependency on costly and polluting diesel generators.”

QUOTE from Geoff Sinclair, Managing Director of Camco Clean Energy, REPP’s Investment Manager

“The announcement that the Mubuga project has moved to full construction is a landmark moment for Burundi’s energy sector and for the people of Burundi. REPP is very glad to have supported the project and its sponsors, Gigawatt Global and Evolution II Fund. We are especially pleased to be partnering with the ATI to deliver an innovative risk mitigation solution for IPPs in the region. We congratulate ATI on the first application of the RLSF product and look forward to working together with them again in future.”

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