By KENNEDY MUPESENI-
The African Renewable Energy Fund (AREF) has committed US $100 million capital to support small-to medium-scale independent power producers (IPP)s in the Sub-Sahara Africa.
The move is a major boost for Sub-Sharan African countries which will enable them to explore energy sources to offset power deficits being experienced in respective countries.
These funds would be invested in grid-connected development stage renewable energy projects including small hydro, wind, geothermal, solar, biomass and waste gas.
Investor groups include West African Development Bank (BOAD), Ecowas Bank for Investment and Development (EBID), Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO), Calvert Foundation, Berkeley Energy and ABREC, who are the vision-bearers of the fund.
According to the statement released in Lusaka, the funds would target IPPs with an ideal size of between five and 50 Mega Watts and a commitment per project of between $10 million and $30 million, with the capacity to source further funding from co-investors where necessary for a larger
Africa Development Bank (AfDB) is the fund’s lead sponsor, bringing $65 million in an equity investment package from its statutory resources as well as climate finance instruments such as Sustainable Energy for Africa (SEFA).
The other institution is the Global Environment Facility (GEF) to leverage commercial and institutional investment.
SEFA would additionally fund a Project Support Facility (PSF), which would provide resources to be deployed at an early stage to structure bankable deals.