OPIC President Presents Framework for Energy Progress in Power Africa
June 4, 2014
(OPIC)
ADDIS ABABA – Elizabeth Littlefield, President and CEO of the Overseas Private
Investment Corporation (OPIC), presented a set of guidelines aimed at increasing
private sector investment in the power sector in developing countries while
speaking today at the U.S.-Africa Energy Ministerial, a landmark event co-hosted
by the Governments of Ethiopia and the United States.
Produced in response to feedback from investors, developers, and governments,
the document presented by Littlefield offers a ten-point framework of essential
elements to making a power purchase agreement (PPA) bankable. Long-term offtake
contracts between energy producers and governments are often the foundation for
financing from development agencies and banks for power sector projects across
the continent. This list of key PPA elements was developed collaboratively – and
represents the consensus viewpoint of – OPIC, the U.S. Agency for International
Development, the U.S. Department of Commerce, the U.S. Trade and Development
Agency and numerous international development finance institutions.
“Bankable power purchase agreements are key to unlocking private and public
sector capital needed to build generation capacity across the continent – which
is the goal of Power Africa,” said Littlefield. “Sometimes simple is better and
less is more. This framework outlines, on one page, the key elements for
attracting financing to energy projects. This framework helps connects the
people who benefit from increased energy access with the investors, financiers,
and innovative project developers who have the resources to build power projects
throughout the continent.”
OPIC is a key part of President Obama’s Power Africa Initiative which aims to
double energy access on the continent by providing financing of more than $7
billion for 10,000 new megawatts of power. Power Africa’s whole-of-government
focus on expanding power access across Sub-Saharan Africa involves large and
small energy projects, many requiring the negotiation of a PPA.
The framework Littlefield presented at today’s meeting aims to accelerate this
process by creating a basis for negotiation between private sector investors and
African governments.
“An agreed-upon list like this benefits government, producer, and consumer,”
added Littlefield. “Developers, lenders, and local governments can devote time
and resources towards projects with shared expectations and clear paths for
progress. OPIC and our U.S. Government partners have supported power projects
all over the world, with a recent and distinct focus in Sub-Saharan Africa. A
bankable PPA framework is the product of decades of work in power sector
negotiation, and I’m confident this document can add efficiency and
effectiveness to future power project development and negotiation.”
Features of bankable PPAs include controls like fixed tariffs and foreign
currency exchange protection to ensure viable pricing, as well as key
administrative mechanisms like dispute resolution and risk assignment for power
transmission between generation source and consumers.
Learn more in a brochure featuring the 10 Elements of a
Bankable PPA.
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