Four South African projects secure guarantees from the Multilateral Investment Guarantee Agency, a member of the World Bank Group
TWO NORTHERN Cape renewable energy projects are among four projects in the country that have secured World Bank guarantees in support of the construction, ownership and operation of investments in South Africa’s renewable energy sector.
The news of the investment came in the wake of Mineral Resources and Energy Minister Gwede Mantashe releasing draft amendments for enabling municipalities with sound financials to procure their own electricity generation capacity from independent power producers, for public comment.
Two solar photovoltaic plants (Aggeneys and Konkoonsies II) will be based in the Northern Cape, while two wind power plants (Golden Valley and Excelsior) will be based in the Eastern and Western Capes respectively.
The projects are owned by BioTherm, the South African head-quartered independent power producer (IPP), which is wholly owned by global energy investor Actis. The guarantees come from Miga (Multilateral Investment Guarantee Agency), a member of the World Bank Group.
BioTherm currently owns 394 megawatts of renewable projects in construction and operations in South Africa and Kenya
“We are pleased to continue working with seasoned investors and promote investments across Africa despite the strained global environment,” MIGA executive vice-president Hiroshi Matano said. “Increasing renewable energy capacity to serve demand and diversifying South Africa’s energy mix, this project also helps to reduce GHG (greenhouse gas) emissions.”
According to a press statement: “When operational later this year, the new plants will have a combined installed capacity of 288 megawatts, and the electricity will be sold to Eskom under 20-year power purchase agreements (PPAs) signed in 2018.”
“Miga’s guarantees are covering 90% of BioTherm’s equity investment for up to $46.9 million (about R860 million) in the photovoltaic solar plants and $68.9 in both wind production plants. The guarantees provide protection against the risks of transfer and inconvertibility, expropriation, breach of contract, and war and civil disturbance for up to 15 years,” said the statement.
Meanwhile, among the proposed requirements contained in Mantashe’s amendments, municipalities will need to demonstrate a sound financial position and apply to the minister with a feasibility study for approval.
Mantashe said: “The amendments will ensure orderly development that is in line with the Integrated Resource Plan 2019 and municipal integrated development plans.”
Absa economist Peter Worthington said: “With most of the policy focus currently on fighting Covid-19 and limiting its damage to the economy, it is encouraging that efforts to introduce reforms have not completely fallen off. We believe that structural reforms will be critical in determining South Africa’s recovery path after the Covid-19 crisis.”