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NORAD Grants $56 Million to ATI for Renewable Projects in Africa

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The Norwegian Agency for Development Cooperation (NORAD), a directorate under the Norwegian Ministry of Foreign Affairs, is providing a grant of NOK 500 million (~ $56 million) to the African Trade Insurance Agency (ATI) for its renewable energy sector initiatives.

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The funding will ensure renewable power projects by independent power producers (IPPs) in Africa. The grant will support the ATI in expanding the Regional Liquidity Support Facility (RLSF), as well as developing additional insurance or guarantee products for small and medium-sized clean energy initiatives.

The RLSF is a bilateral partnership launched in 2017 by ATI and the German development agency, KFW, that aims to mitigate climate change through the developments of renewable energy projects. RLSF mechanism is designed to address the short-term liquidity risks faced by the IPPs that sell power to state-owned utilities in African countries.

RLSF has supported four major solar projects in Burundi and Malawi, financing over $150 million for a total installed capacity of 108.5 MW. ATI has also supported various other renewable energy projects across African countries, enabling an installed capacity of more than 500 MW.

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Manuel Moses, the CEO of ATI commented, “ATI is proud to be NORAD’s strategic partner on this initiative, which will go a long way in enhancing our renewable energy sector initiatives. Furthermore, this partnership is happening at an opportune moment as Africa is seeing greater interest from the public and private stakeholders in the renewable energy sector.”

Moses also mentioned the grant would support renewable projects to reach financial closure, increasing the energy generation capacity and supporting sustainable economic growth in sub-Saharan Africa. It will help to develop new products to stimulate additional investments in distributed clean energy sector that have traditionally less benefited by funding and insurance support.

Bard Vegar Solhjell, NORAD’s Director General, commented, “This innovative instrument helps unlock the private finance needed to bridge the energy access gap, while also contributing to reduced greenhouse gas emissions. It is an important tool in catalyzing much-needed commercial investments in/to the energy sector in Africa. Dialogue with renewable energy developers has confirmed the high relevance of liquidity guarantees.”

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The current gross exposure of ATI in direct support towards transactions in renewable power generation stands at $210 million. The grant from NORAD has significantly increased this exposure in the long term. Currently, the RLSF covers seven African countries, including Benin, Burundi, Ivory Coast, Madagascar, Malawi, Uganda, and Zambia. 

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