Uganda has signed an agreement with the Regional Liquidity Support Facility (RLSF) to protect new small and mid-sized renewable energy projects (up to 50MW) in Sub-Sahara Africa
RLSF is a joint initiative of the African Trade Insurance Agency (ATI), a Pan-African and multilateral guarantor and KfW with funding from German Ministry of Economic Cooperation and Development.
The World Bank estimates that the continent needs to generate annual capacity of 7,000MW but such a ramp-up in generation capacity cannot be achieved without private sector participation. The RLSF, as a pragmatic option, could, therefore, become a more widely used solution to solve Africa’s energy deficit challenge.
The RLSF has an initial capacity equivalent to US$74mn and will protect Independent Power Producers (IPPs) against the risk of delayed payments by public off-takers.
The move reflects Uganda’s commitment to ensuring the viability of small and medium-scale renewable energy projects. Speaking during the signing ceremony, Matia Kasaija, minister of finance, planning and economic development of Uganda, commented, “Uganda has a solid history of supporting our public concession with upwards of US$500mn spent in the last decade on improvements to the grid. With this agreement, we see RLSF providing a perfect complement to our on-going strategy of accelerating the delivery of clean energy to the national grid.”
Under the RLSF programme, all renewable IPPs that have not reached financial close, as well as new IPPs can apply for the product.
“RLSF is a tool that can ensure more renewable energy projects reach financial close. For Africa, small and mid-sized projects may be a better fit to the current environment requiring less financing and they can be implemented much quicker. This could be a model that works in many other African markets that may just pave the way for an expansion of the facility or other such initiatives,” noted George Otieno, CEO of ATI.
