Ghana IPPs to get liquidity support facility from the Africa Trade Insurance Agency

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Ghana has signed an MoU with the African Trade Insurance Agency (ATI) for the roll out of the regional liquidity support facility (RLSF) within the country to support IPPs.

This is in line with the nation’s aim to advance access to dependable, affordable, and clean electricity.

The RLSF, a joint project of ATI, KfW Development Bank, and Norwegian Agency for Development Cooperation (Norad), is a financial product that addresses the short-term liquidity risks faced by small and medium-sized Independent Power Producers (IPPs) that sell electricity to state-owned power utilities, enhancing bankability and assisting such projects to reach financial close.

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IPPs to get liquidity support facility to support Ghanas energy needs

The company said in a statement, “The MoU was signed at a good moment, as Ghana’s energy consumption is rising by 10% annually and the nation is concentrating on boosting the share of renewable energy sources in the country’s energy mix. The MoU would enable IPPs in Ghana to take advantage of the regional liquidity support facility. It was established not only to shield IPPs from the risk of delayed payments by public offtakers. But also to assist renewable energy projects in ATI member countries and combat climate change.”

Ghana has one of Africa’s highest rates of electricity availability at 86.63 percent. With a connection rate of 95 percent in the cities and 74 percent in the countryside.

Additionally, Ghana sends extra electricity to its neighbours Benin, Burkina Faso, and Togo. However, the nation seeks to industrialize, modernize its agriculture, and create economic possibilities for its expanding population. The nation currently has a total installed capacity of approximately 5,300 MW.

Access to affordable and dependable electric power, however, is one of the major obstacles to realizing this objective. The Electricity Company of Ghana (ECG), will therefore no longer have to shoulder the financial burden of having to provide collateral for similar liquidity instruments under power purchase agreements thanks to the availability of RLSF.

Nine ATI Member States have signed the MoU for the .regional liquidity support facility. They include Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Togo, Uganda, and Zambia.