Three wind farms in South Africa to recieve US$73m World Bank support

Three wind farm projects, Noupoort, Khobab, and, Loeriesfontein 2 in South Africa will recieve support from World Bank Group member Multilateral Investment Guarantee Agency (MIGA).

MIGA announced guarantees of US$73m to support the construction, operation and maintenance of the three wind farms. With a collective generation capacity of 360MW, the wind farms have the potential to reduce nearly 30 million tons of Carbon dioxide over their lifetime.

MIGA’s guarantees cover equity and shareholder loan investments made by renewable energy company Lekela Power and its subsidiary Lekela Power Intermediate Holdings.

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They also provide protection for up to 15 years against the risks of expropriation, transfer restriction and inconvertibility, breach of contract, and war or civil disturbance. The guarantees will cover 90% of the equity and shareholder loan investments.

MIGA executive vice-president and CEO Keiko Honda said that the wind farms will help diversify the country’s energy mix, and directly benefit local communities.

“Such large power generation capacity also provides opportunities for South Africa and its neighbours to further realize their development potential,” he said.

The Noupoort wind farm began operations in 2016, while Khobab and Loeriesfontein 2 commenced operations last year.

Power Purchase Agreement

National state-owned utility Eskom has signed a 20-year power purchase agreements (PPA) with three wind farms. The PPA’s signed by Eskom are supported by the implementation agreement (IA) with the South African Government.

Lekela chief operating officer Chris Ford said that building and operating renewable capacity in African countries requires a highly skilled and an experienced team capable of managing the risks inherent in these complex projects.

“Alongside our engineering expertise, extensive engagement with local communities, and focus on delivering the highest standards of business ethics, holding effective political risk insurance is also a key component of our risk management strategy,” he added.

MIGA guarantees additional cover in the event the government fails to comply with its obligations under the IA.

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