- Kenya becomes the tenth ATIDI member state to sign the RLSF MoU after Benin, Burundi, Côte d’Ivoire, Ghana, Madagascar, Malawi, Togo, Uganda and Zambia.
- Each RLSF policy will cover up to a maximum of twelve (12) months’ worth of revenue for the project.
Image: MICHAEL GOTTSCHALK
Kenya has signed an agreement with ATIDI, the African Trade Insurance Agency to identify, develop, and implement renewable energy projects.
This will be implemented via the Regional Liquidity Support Facility (RLSF), a credit enhancement instrument provided by ATIDI to renewable energy Independent Power Producers (IPPs) that sell the electricity generated by their projects to state-owned power utilities.
The instrument’s scope has recently been extended to provide support for eligible transmission projects; allowing for possible private sector participation in this key sub-sector.
ATIDI will issue liquidity instruments, or “RLSF policies”, backed by cash collateral from KfW and Norad, to IPPs or private transmission companies for a maximum tenor of up to 15 years.
Each RLSF policy will cover up to a maximum of twelve (12) months’ worth of revenue for the project.
The facility cover is available to renewable energy projects of up to 100 MW (larger projects can be considered on a case-by-case basis), and private financed transmission projects.
With the RLSF MoU now in place, ATIDI will engage with IPPs in Kenya with the expectation that advanced hydro, geothermal, solar, and wind projects may benefit from this instrument in the near future.
The projects will not only focus on leveraging the country's abundant natural resources to generate clean and sustainable energy but will also reinforce its power generation and transmission capacity.
Statistics show that over 80 per cent of Kenya's electricity is generated from renewable energy sources.
This places the country of over 50 million people well on its way to meeting its goal of transitioning to 100 percent clean energy by 2030.
; signing of the RLSF MoU will provide an additional incentive for private sector participation in achieving this goal as recipients of this liquidity instrument will benefit from ATIDI’s positive credit rating of A and A3 from S&P and Moody’s, respectively.
Speaking during the MOU signing event, National Treasury CS Njuguna Ndung'u said that Kenya is constantly looking for various ways to encourage private sector participation in the financing of key infrastructure, such as the development of renewable energy power plants and key transmission infrastructure.
"The provision of RLSF policies will hopefully enable more projects to advance whilst reducing the need for government-backed credit enhancement tools,'' Ndung'u said.
ATIDI CEO Manuel Moses on his part said the MOU sends out a positive message to project developers, lenders, and other prospective stakeholders looking to invest in Kenya’s energy sector.
"Our support for new projects in Kenya via RLSF will build on our historical involvement in the country’s energy sector, having supported projects such as the Lake Turkana and Kipeto wind projects in the past.”
Energy CS Davis Chirchir said the partnership should make a positive contribution towards the attainment of the country’s long-term development agenda - the Vision 2030 - which aims to ensure Kenya becomes a ‘newly-industrializing, middle-income economy, providing a high quality of life to all its citizens.
Kenya becomes the tenth ATIDI member state to sign the RLSF MoU after Benin, Burundi, Côte d’Ivoire, Ghana, Madagascar, Malawi, Togo, Uganda and Zambia.
To date, RLSF policies have been issued in support of six renewable energy projects in Burundi, Malawi and Uganda; enabling total financing of $207.5 million and a total installed electricity generation capacity of 136.3 MW.