Negotiating African power projects

The Mozambique Office of the African Development Bank (AfDB) recently hosted Mozambican participants who took part in the first Virtual Power Working Group Meeting on infrastructure, whose theme was on negotiating agreements on power projects in Africa.

 The meeting was sponsored by the Infrastructure Consortium for Africa (ICA) and the U.S. Treasury Department in March 2010. The Working Group virtually linked senior level participants in a number of sites in Accra, Dakar, Dar Es Salaam, Johannesburg, London, Nairobi, Maputo, Tunis and Washington, D.C. Participants represented Ministries of Finance and Energy, regulators, power utilities, power plant developers and financiers.
A Virtual Power Working Group session that is scheduled for 8th April 2010, in addition to this one, shall serve as preparation for a U.S.-Africa Infrastructure Conference that will be convened by the Corporate Council on Africa (CCA) in Washington D.C. at the end of April 2010. As part of the agenda for the CCA event, African Ministers of Finance will examine the overall outcome of the two discussions sessions of the Virtual Working Group on African Power Projects.
The discussion focused on the processes of identification and management of risks in two principal areas:
1. Government/”high-level” risks, which includes Government Support, tax stabilisation, political force majeure, currency convertibility and transferability, foreign currency accounts, offtaker payments, project termination risks.
2. Other project risks, which includes currency, payment, delivery, fuel, environmental and subsurface risks.

Participants pointed out that Government high level risks have been discussed for a long time without visible developments or changes so far. The next Virtual Working Group meeting is expected to propose concrete solutions for supporting the work being done in different countries in negotiating power agreements and improving conditions for power projects on the continent in general.
Mozambique representatives were from the Ministry of Energy, the private company Vale, Mozambique Electricity Supply Company, and the National Electricity Council.

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