Uganda has become the first African country to de-risk medium scale renewable energy projects by signing up to the German and African Trade Insurance-backed Regional Liquidity Support Facility (RLSF).
RLSF is a joint initiative of the African Trade Insurance Agency – a Pan-African and multilateral guarantor – and KfW with funding from German Ministry of Economic Cooperation and Development.
The RLSF has an initial capacity equivalent to $74 million and is designed to provide a solution to a the requirement of independent power producers to provide project lenders with a liquidity guarantee; a significant obstacle that IPPs operating in Africa currently face.
“RLSF is a tool that can ensure more renewable energy projects reach financial close,” commented George Otieno, ATI’s Chief Executive Officer. “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.”
The World Bank estimates that the continent needs to generate annual capacity of 7,000 MW but such a ramp-up in generation capacity cannot be achieved without private sector participation.
“Uganda has a solid history of supporting our public concession with upwards of $500 million spent in the last decade on improvements to the grid, Added Honorable Matia Kasaija, Uganda’s Minister of Finance, Planning and Economic Development.
“With this agreement, we see RLSF providing a perfect complement to our ongoing strategy of accelerating the delivery of clean energy to the national grid.”
