MIGA insures Actis’s energy investments in South Africa

SOUTH AFRICA – Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group, has issued guarantees in support of the construction, ownership and operation of Actis Energy investments in South Africa’s Renewable Energy Sector. 

The solar photovoltaic power plants (Aggeneys and Konkoonsies II) are located in South Africa’s Northern Cape, and two wind power plants (Golden Valley and Excelsior) are located in the Eastern and Western Capes. 

“We are pleased to continue working with seasoned investors and promote investments across Africa despite the strained global environment,” MIGA Executive Vice President Hiroshi Matano said.  

“Increasing renewable energy capacity to serve demand and diversifying South Africa’s energy mix this project also helps reducing GHG emissions.” 

When operational later this year, the new plants will have a combined installed capacity of 288 MW, and the electricity will be sold to Eskom under 20-year PPAs signed in 2018. 

MIGA’s guarantees are covering 90% of BioTherm’s equity investment for up to US$46.9m in the photovoltaic solar plants and US$68.9m in both wind production plants. 

The guarantees provide protection against the risks of Transfer and Inconvertibility, Expropriation, Breach of Contract, and War & Civil disturbance for up to 15 years. 

BioTherm, the South African headquartered Independent Power Producer (IPP), which currently owns 394MW of renewable projects in construction and operations in South Africa and Kenya, is wholly owned by global investor Actis. MIGA currently supports Actis on projects across multiple countries, providing about US$900m in guarantees. 

The guarantees in South Africa are part of Actis’ overall risk management strategy in the energy sector. 

The two solar plants are expected to create up to 1,100 temporary jobs during construction, helping alleviate the Northern Cape’s unemployment rate of 28.9 percent. During operation, the project will create 160 jobs, 75% of which will be for local communities. 

The projects are compliant with Broad-Based Black Economic Empowerment (BBBEE) policies, and are 2.5 percent-owned by local community trusts. The Excelsior wind plant will consist of 13 turbines, while Golden Valley will be made up of 48 turbines. Both wind plants will create 1,050 jobs during construction and 150 during operation. 

“MIGA’s political risk insurance plays an important role in attracting institutional capital to renewable projects across our markets with high growth potential” Actis Energy & Infrastructure Director Colin FitzRandolph explained. 

Actis is pleased to build on our strong relationship with MIGA to deliver additional renewable power to the South African grid and to foster partnerships in the local communities surrounding the projects.” 

MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders. 

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