London, 29 October 2014
The UK Department for International Development (DFID), the Department of Energy and Climate Change (DECC), and the PIDG Trust have finalised the Funders’ Agreement for Green Africa Power LLP (GAP).
The Funders’ Agreement between DFID, DECC, the PIDG Trust and GAP formalises arrangements in relation to funding commitments, reporting and monitoring obligations and management of the investments within GAP. With this agreement now signed, GAP has the funding commitments necessary to begin operations.
Chair of the GAP Board, Jim Cohen, explains: ‘Signing the Funders’ Agreement with DFID and DECC is a significant milestone in Green Africa Power’s development. It means we can engage actively with developers and other partners to bring qualifying projects to financial close and deliver our donors’ mandate.’
This represents a critical step forward. Africa is the world’s most power-starved region, with more than 700 million people lacking access to electricity. There is a shortage of all types of power generation projects in Africa, but particularly renewable power projects.
GAP has been designed to counter the pronounced market failures inhibiting the growth of renewables in the region by reducing the upfront cost of capital while maintaining overall commercial returns, providing cover for specific construction phase risks, and facilitating policy dialogue to move towards cost reflective tariffs.
GAP, the newest of PIDG’s Facilities, has been set up to stimulate private investment in renewable energy in Africa by acting as a long term source of financing and policy support to projects. It was formed after a scoping exercise funded by the UK Department for International Development (DFID) and the Norwegian Agency for Development Cooperation (Norad) concluded that there was definite potential for a fund to address key market failures and stimulate private sector investment in renewable energy in Africa.