AFRICA - THE RISING CONTINENT;
FINANCING BUSINESS OPPORTUNITIES
Sharing Business Experience
Hans Jacob Bull-Berg
Director, Project Finance
Oslo, March 25, 2015
Sharing Business Experience
2
SN Power Group current locations
Norway
Philippines
Panama
Myanmar
Laos
Zambia
Mozambique
March 25, 2015
3
Ownership and Balance Sheet
Norwegian Government
100 %
100 %
Statkraft
SN Power established 2003
Agua Imara established 2009
Norfund
50 %
SN Power Group reorganized 2014
under one management
50 %
SN Power
BKK
35.1 %
64.9 %
Balance Sheet: MUSD 1,200
Net installed capacity: 500 MW
Agua Imara
20%
50 %
50.1 %
Laos
March 25, 2015
Philippines
Panama
51 %
Zambia
Competitive advantages in low income countries
Long-term investment strategy
Capitalize on our owners’ technical and financial strength as
well as on the Norwegian hydropower tradition
Multi-disciplinary project teams with expertise in
hydropower, power markets, finance, regulations,
environment, legal and social issues
Demonstrated ability to execute projects in difficult markets
Providing renewable, non-carbon based energy for the future
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March 25, 2015
7
Agua Imara SSA strategy
 Country focus
–
–
–
Mozambique (rep. office)
Uganda
Zambia (51% share in LHPC)
 Project focus
–
Pursuing good project opportunities
in other, selected countries
 Partner focus
–
Cooperation strategies towards
other hydropower investors in Sub
Saharan Africa
 Preferences
–
–
–
March 25, 2015
Mid-size HPPs in the 50 to 300 MW
range
«Peak» and «shoulder» production
pattern
Potential for dev. of regional power
markets
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Financing Challenges – The risks
Project execution - understanding country risks
– Power sector risks – often insufficient national reform
1. Introducing cost reflective tariffs
2. Splitting monopolistic role (grid) from generation and distribution
3. Creating a non-partisan regulator
4.
Enabling a commercial and durable deal
– Change of law risks
1. Concessions, permits
2. Water management (our resource!!)
3. Environment & Social issues
4. Taxation
– Major political risk events, such as
1. WCD (War and Civil Disturbance),
2. Nationalization,
3. Transferability,
4. Breach of Contract
March 25, 2015
9
Financing Challenges – The partnerships
Project execution - mitigating country risks - partnerships
• Local partner
• Partnering with local authorities
– Legal and economic stabilization
– Support mechanisms for publix PPA off-taker, grid provider
• Partnering with experienced financial institutions
– Multilateral banks
– National development banks
– Commercial banks
• Partnering with able guarantee institutions
– Development guar. Institutions
– Export Credit Agencies
March 25, 2015
10
Who takes the politico/commercial risks?
Project execution - identifying counterparty risks
– The off-taker of power and grid provider is normally the national
power company – often with low credit rating/high risk
– Sovereign counter-guaranties seldom obtainable (IMF limitations
on HIPC (Heavily Indebted Poor Countries), etc.)
… and mitigating them
– For the loan financing, financial institutions/DFIs/donor
organizations/ECAs will to a large degree have to absorb these
risks
– The IPP has its own equity at stake, and absorbs the risk for the
equity
March 25, 2015
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Conclusions
Long term investors in Africa need long term, committed
financial institutions on their side:
• Understanding our risks
• Advising/assisting in structuring marketable financings
• Ability to take out the political risks for the commercial banks
at:
• Acceptable prices, with simpler structures than we know
them today
leading to:
• Lower power prices - increasing the competitive advantage
of renewable energy in Sub Saharan Africa
March 25, 2015
THANK YOU FOR YOUR ATTENTION
[email protected]
+47 952 94 859