Couverture des risques d'investissement
Capacity in MW
The convertibility and transferability risks are particularly important for the sustainability of renewable energy Independent Power Producers (IPP) as electricity is paid by the off-taker to the IPP in local currency while power plants are typically financed in hard currencies. Yet, the local governments are usually not in a position to cover this risk for power projects. In addition, while the political risk insurance of the World Bank (MIGA) offers protection for currency inconvertibility and transfer restriction, this insurance will typically not be available if tensions have already materialized (for instance, MIGA was not available in Egypt at the peak of the convertibility crisis, nor in Nigeria or Ethiopia as the situation has deteriorated). As a consequence, these risks represent a significant barrier to finance energy projects while the countries are facing an urgent need for more abundant and cleaner energy. However, in cases where convertibility or transferability is limited, the IPP is still in a position to receive its energy payments locally in local currency. It can therefore lead to paradox situations where the Project has available cash onshore but is defaulting on its debt repayment offshore as the IPP is waiting for the transfers off shore.
The main concept of this facility is to provide for a financial instrument which could very simply address this issue. Country/ies/region ElectriFI geographical scope Total budget (estimated) € 451.2 million EU contribution (estimated) € 31.2 million Beneficiary contribution € 105 million (equity from sponsors) RE generation capacity (MW)/ grid (km)/ access (expected) 250 MW (tbc) Expected outcomes/achievements
- The project would contribute to SDG7 on energy. It would also contribute to SDG 13 and the objectives set out by the Paris Agreement. - The proposal objective is to provide as solution for IPP projects, in those cases where convertibility or transferability is limited, but the IPP is still in a position to receive its energy payments locally in local currency. This could lead to situations where the Project has available cash in local currency but is defaulting on its debt repayment as the IPP is waiting for the cash to be converted into hard currency and transferred.
Global. All senior lenders who do not already benefit from a preferred creditor status which gives them priority in terms of convertibility would be covered by the Instrument
Project Follow Up
Co-financier (if applicable)
EU Contribution € 31.2 million
Budget Total en Millions d’Euros
451.2 Mio EURO
Equity in Millions of Euros
Technique Assistance in Millions Euros