R.M. Gaillard Lead Officer Infrastructure and PPP’s HYDRO 2006, September 2006 AfDB and the Dams & Hydropower sector in Africa AfDB and the Dams & Hydropower sector in Africa
Jan 04, 2016
R.M. Gaillard Lead Officer Infrastructure and
PPP’s
HYDRO 2006, September 2006
AfDB and the Dams & Hydropower sector in Africa AfDB and the Dams & Hydropower sector in Africa
2 HYDRO 2006
The electricity sector in Africa
3 HYDRO 2006
Electricity in Africa
4 HYDRO 2006
Hydropower potential in Africa
Practicable Hydropower potential
Europe16%
Asia29%
Africa19%
North America7%
Latin America27%
Oceania2%
Developed Potential
Europe 51%
Asia 22%Africa 8%
North America 80%
Latin America 23%
Oceania 34%
Region Practicable Developed hydropower
Hydropower 1990 2000 2020
TWh/a TWh/a
% TWh/a % TWh/a %
Europe 1670 745 45%
845 51%
1080 65%
Asia 3050 390 13%
670 22%
1890 62%
Africa 2000 57 3% 160 8% 1240 62%
North America
775 587 76%
620 80%
645 83%
Latin America
2825 418 15%
650 23%
1550 55%
Oceania 160 43 27%
55 34%
95 59%
The World 10480 2240
21%
3000 29%
6500 62%
5 HYDRO 2006
Impact of High Crude Oil Prices
These recent years, the drastic increase of oil prices has resulted in several effects
Contribution to the global (continental wise) economic growth mainly due to the revenues cashed by oil producing African countries.
Increase in the energy bill for land locked countries
For theses countries additional burden on the public finance impeding investments in various sectors
Raising interest for renewable energies
6 HYDRO 2006
The Challenges of Hydropower Development in Africa
Capital intensive
The governments and the public sector cannot alone mobilize significant amount of funds
Long and costly development phase
Preliminary surveys, investigations and development studies require large amount of seed money
Risks
Political and market risks are perceived as high
Natural risks are not properly allocated
7 HYDRO 2006
Solution to be Explored
Public Private Partnerships (PPP’s)
A contractual arrangements which bundles financing and operation/maintenance of traditionally government owned assets or traditionally delivered public services
Government sets policy and identifies needs
Private sector companies compete to fulfill that needs
Government enforces regulations and contracts
Risks are transferred to the party best suited to manage them
8 HYDRO 2006
PPP Approach and its Requirements
Strong support and political will from the host country government
Existence of skills and capacities on both sides to handle complex transactions
Existence of a business and institutional environment enough conducive to attract private players
9 HYDRO 2006
AfDB Activities in the Hydropower Sector
Public Sector Window Bumbuna hydropower scheme in Sierra
Leone (co financing of the project completion)
OMVG Development program (Financing of the detailed FS)
Grand INGA (co-financing for the FS to be performed soon)
Rusumo Falls scheme (Rwanda, Tanzania, Burundi, co-financing of studies for the T line)
Private sector Window AES Sonel Investment Program in
Cameroun (Bank participation 60 Mio Euros)
Bujagali Hydropower Scheme in Uganda (Bank participation 85 Mio $ + financing of the TLine)
OMVG Development program (Financing the Consultant for assistance to realization of projects under PPP. Approx 1.5 Mio $)
Memvele hydropower scheme in Cameroun. (Member of the potential Lenders Group)
Mini hydro plants in Madagascar and Eastern Africa
10 HYDRO 2006
AfDB roles and products
Roles
Catalyst role
Technical assistance and project preparation
Advisory services
Financing tools
Equity participation
Senior Loans
Guarantees
11 HYDRO 2006
AfDB roles
Catalyst
To provide comfort to the sponsors and other stakeholders
The leverage effect
Technical assistance
For project « last mile » preparation phase
For capacity reinforcement of the host government
Advisory services during the project appraisal and the due diligence phases
12 HYDRO 2006
Financing Tools
Equity participation
Senior Loans Various hard currencies (US$, Euro, JPY and ZAR) with possibilities in
some local currencies Interest rates: floating, fixed or variable Loan duration: up to 15 years for private borrowers Grace period: dependent on the project features and time frame. (up to
5 years) Fees: appraisal fee, commitment fee, front end fee …
Guarantees Partial credit Partial risk
13 HYDRO 2006
Organisation of AFDB
Public sector window (With sovereign guarantee)
Borrower/Beneficiary: Government
Project/sector must be included in the Country Strategy Paper
Private sector window (Without sovereign guarantee)
Borrower/beneficiary: Private Developer, the Project Company. (or public companies presenting some specific characteristics)
14 HYDRO 2006
How to work with the AfDB
Criteria’s for project eligibility
The borrower must be established in a RMC
Project size : Min 10 Mios $
AfDB not the largest single lender (Limited to 1/3 rd of the project cost)
Introduction of direct requests/enquiries to the Bank
15 HYDRO 2006
Typical Internal Process for a Senior Loan
Concept review• Review of information
memorandum
• Analysis of project context
Letter of Interest
Operations Committee
Investment Committee
Negotiation• Legal review (advisor)
• Term – sheet negotiation: milestones, security package
Term sheet Approval• Final presentation to the
board
Board approval
Loan agreement
Project Appraisal• Detailed review of project
• Technical review
• Risk assessment
Investment proposal
16 HYDRO 2006
As a Conclusion and Road Map for Africa
OUTCOMES OF AFRICAN MINISTERIAL CONFERENCE ON HYDROPOWER ANDSUSTAINABLE DEVELOPMENT
JOHANNESBURG, SOUTH AFRICA6 - 9 MARCH 2006
“ Commit to working together (ministers of water and energy) to unlock the hydropower potential of Africa as a major renewable energy option to promote sustainable development, regional integration, water and energy security, and poverty eradication in Africa.”
17 HYDRO 2006
Contacts at the AfDB
Infrastructure Department (OINF)
R.M Gaillard, Lead Officer Infrastructure and PPP’s
Tel: +216 71 10 21 32
Fax: + 216 71 33 26 95
Email: [email protected]
Web site: www.afdb.org
Private sector Department (OPSM)