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African projects and programs: Developing enhanced relationships between private sector project developers and financia

African projects and programs: Developing enhanced relationships between private sector project developers and financial institutions. Africa Carbon Forum, Nairobi, March 2010. Hela Cheikhrouhou Manager, Private Sector Infrastructure Finance.

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African projects and programs: Developing enhanced relationships between private sector project developers and financia

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  1. African projects and programs: Developing enhanced relationships between private sector project developers and financial institutions Africa Carbon Forum, Nairobi, March 2010 Hela Cheikhrouhou Manager, Private Sector Infrastructure Finance

  2. The African Development Bank (AfDB) has extensive experience of working with Private Sector Project Developers and other Financial Institutions to structure project finance deals, including in the renewable energy sector. • This includes sectors such as hydro power, solar, wind energy and cogeneration • AfDB has track record helping local sponsors get interested European Sovereigns (i) finance the Project Validation documents for CDM (ii) commit to buy the carbon credits at a fair market price. • AfDB does not buy carbon credits but is interested to know about the potential buyers as it can facilitate contacts with local project developers.

  3. Key Bottleneck--For Local project sponsors, preparing CDM proposals is an uphill battle. Complicated access rules of the CDM. • Limited expertise of project developers and little external support in the area. • Long time period taken for validation of project proposals.

  4. Leveraging financing: A key role is to leverage financing from other sources, providing comfort to investors on the financial viability of projects. Project structuring by AfDB: • AfDB by mandate has appetite for greenfield project finance, and can provide competitively priced long maturity loans, both hard currencies and where possible in local currency. AfDB leverages its AAA balance sheet. • AfDB can offer guarantee instruments to mitigate risk. • Africa Financing Partnership is a platform for DFIs active in Africa to work jointly. This allows for timely process to financial closing.

  5. AfDB offers the A-B Loan structure where it extends the benefit of its Preferred Creditor Status to interested international commercial lenders. • AfDB nurtures/invests in a portfolio of Private Equity Funds, which in turn can provide much-needed equity to help project developers reach financial closing. • AfDB encourages local project developers to approach it at early stage. We provide guidance and advice to help along the project preparation as per best standards in project finance. • On a targeted basis there can be grant support, and when feasible financing can be provided to Governments to help with sovereign project/project components.

  6. Providing a complete package: • Financing via both Public and Private Sector Windows: This helps achieve synergies between the Government and Private sector in countries and makes the financing of Public Private Partnerships easier. • The AfDB is able to provide financing for both small and large projects.

  7. Uganda Project Cost USD 736 M ADB loan USD 110 M ADB roles Project Structuring Long-term Lender Benefits Independent power project (IPP) Expand the supply for electricity Reduce generation cost Long-term socio economic benefits The 250MW Bujagali Hydroelectric Power Project, a catalyst for Power Sector Reform

  8. Project Cost Project Cost USD 13 M ADB loan USD 6 M ADB roles Project Structuring Long-term Lender Benefits Independent power project (IPP) Expand the supply for electricity Reduce generation cost Long-term socio economic benefits The 15MW Sahanivotry Small Hydroelectric Power Project, a catalyst for Power Sector in Madagascar

  9. Project Cost Project Cost USD 26 mn ADB loan USD 9 mn ADB roles Project Structuring Long-term Lender Benefits Independent power project (IPP) Connection of rural population Reduce generation cost Long-term socio economic benefits The 9MW Buseruka Small Hydroelectric Power Project, a catalyst for Power Sector in Uganda

  10. THANK YOU h.cheikhrouhou@afdb.org

  11. Additional slides

  12. Africa’s Energy resource Potential

  13. Africa’s Energy resources Energy production in Africa is around 9,5% of the world output; but consumes …. only 3%. The exploitation of RE resources is still very low and is to be increased

  14. Highlights Energy supply Africa High Need for Investment in the sector

  15. Clean Energy Investments at the AfDB

  16. Way forward • Africa needs to continue it investments programs in particular in the Energy sector – with Focus on Clean Investments: • New Credit facility put in place by the AfDB • Assistance to Low Income Countries (LIC) with concessional resources • Support Private Sector investments in Africa • Technical assistance to RMC to increase their clean investment

  17. Opportunity for lucrative investment in Africa expanding rapidly. Investment climate improving, but remains challenging with region and sector specific knowledge critical. The Infrastructure Finance Team is a partner that provides the key expertise required to assist investors/project sponsors achieve business success in Africa whilst harnessing sustainable development. In Summary

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