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A US$27 million guarantee facility has been reportedly signed to boost Southern African’s renewable energy.
The agreement was signed in Lusaka on Wednesday between Africa GreenCo Group (GreenCo) and GuarantCo.
Under this facility, GuarantCo would issue guarantees to Independent Power Projects (IPPs) from whom GreenCo would buy power.
During the signing ceremony GreenCo’s Chief Investment Officer, Pug Bennet, said this would back the company’s payment obligations to such IPPs.
Bennet stated that GuarantCo’s backing enhances their firm’s credibility in the market.
“This provides significant comfort to such IPPs, and their lenders, increasing bankability and helping to attract investment in new renewable energy generation in Southern Africa,” he said.
Bennet mentioned that the facility provided for the ability to be increased to US$50 million to support further growth of the business.
He stated that the due diligence work had been extensive and that they were to be commended in both their thoroughness and support in developing a bespoke Guarantee Facility.
“The guarantees that will be issued under this Guarantee Facility are a key requirement to enable GreenCo’s IPPs to reach financial close and to start construction of much needed power for the region,” Bennet added.
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Layth Al-Falaki, Chief Executive Officer at GuarantCo, said: “We are delighted to have closed our transaction which aligned with the PIDG 2023–2030 Strategy focus on climate action.
Al-Falaki stated GuarantCo’s sister PIDG company, InfraCo Africa, had supported the development and growth of Africa GreenCo’s pioneering offering since 2020.
“We are very happy to provide a complimentary and innovative credit solution to support the company to further grow its business and provide financial support to solar photovoltaic projects in Southern Africa,” he said.
Al-Falaki noted that the lack of creditworthy off-takers to long term power purchase agreement had been a significant impediment to effectively harnessing the enormous renewable energy potential of Southern Africa.
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