Saturday, December 1, 2012

US to set up Joburg finance hub for clean-energy projects

Three US government agencies have teamed up to establish a Clean Energy Development and Finance Centre (CEDFC) in Johannesburg, South Africa, which will support the development of renewable-energy projects across sub-Saharan Africa.

The CEDFC, which will operate from the US Consulate General, will be led by Overseas Private Investment Corporation (Opic) business development director Peter Ballinger, who is relocating to South Africa to co-lead the centre. In fact, Ballinger will be the only Opic official located outside of the US.

But it is also being supported by the US Trade and Development Agency (USTDA), which also has a permanent representative in Johannesburg in the form of Jason Nagy, as well as the Export-Import (Ex-Im) Bank, which already provides finance to American companies exporting products and services.

The operation has also been aligned with the State Department’s $20-million US-Africa Clean Energy Finance Initiative, which has been set up to catalyse private-sector-led clean energy deals. But its financial firepower is not restricted to that $20-million commitment, which is specifically earmarked to bolster the pipeline of renewables projects available in the region.

The CEDFC will provide technical and financial support for projects related to solar, wind, biomass, geothermal, hydropower, ocean energy and natural gas. Its mandate is to help implement renewables projects across sub-Saharan Africa, while promoting US private-sector participation in the sector.

Ballinger tells Engineering News Online that similar centres have been established in Turkey and in India and that these have been effective in funding “last-mile” work that is required to make projects “bankable”.

The India-based Clean Energy Finance Centre, which has hitherto been led by Ballinger under the aegis of the ‘US-India Partnership to Advance Clean Energy’, has concluded $1.7-billion in clean-energy finance since its establishment two years ago.

The CEDFC will seek to identify projects in the early stages of their development cycle and help ensure that they become bankable projects. It will do so by extending the support systems available from the three agencies as a join-up offering – development finance from Opic, project-study and trade-mission support from the USTDA and finance for American exporters from the Ex-Im Bank.

USTDA regional director for sub-Saharan Africa Paul Marin says the aim is to facilitate communication and coordination between projects sponsors, development financiers and commercial financiers to assess “where the gaps are and how these can be filled” by using the resources available from the various agencies.

“We have found that such coordination efforts have been successful in taking projects from concept to implementation,” Marin adds.

Ex-Im Bank regional director for Africa Rick Angiuoni says the bank is keen to add its weight to the development of renewables projects in sub-Saharan Africa that include US products and services.

The back recently concluded a $2-billion declaration of intent agreement with South Africa’s Industrial Development Corporation, with the specific intention of supporting energy projects.

It also has a Congressional mandate to prioritise sub-Saharan Africa and, over the past three years, it has concluded transactions with US exporters to the region worth nearly $4-billion.

“We believe funding will be a critical component to developing the power sector in Africa . . . and Ex-Im has the balance sheet to support these projects,” Angiuoni asserts.

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