ADDIS ABABA, ETHIOPIA – Ethiopia has signed a landmark agreement with the African Trade Insurance Agency (ATIDI) to accelerate its transition to clean energy.
The Memorandum of Understanding (MoU) aims to attract foreign investment into renewable energy projects through ATIDI’s Regional Liquidity Support Facility (RLSF).
“Through this partnership, Ethiopia aims to facilitate timely payments to developers, mitigate financial risks, strengthen the bankability of power purchase agreements (PPAs), and enhance the creditworthiness of EEP,” said Ahmed Shide, Ethiopia’s Minister of Finance.
His Excellency further strengthened his message by stating that “these efforts will create a more attractive investment environment for renewable energy projects”.
The deal is expected to create a more attractive investment environment for renewable energy projects in Ethiopia, which has made significant strides in expanding its energy sector, primarily relying on hydropower.
The RLSF provides financial protection to Independent Power Producers (IPPs) or Public Private Partnerships by availing and accelerating payments owed by state-owned utilities.
Ethiopia becomes the 11th ATIDI member state to sign the RLSF MoU, joining other African countries in promoting renewable energy development.
Since its inception, guarantees worth $24.7m have been approved under the RLSF portfolio, facilitating investments totalling $373.1m and the development of 181.95 MW of installed renewable energy capacity across Africa.
“We are honored to partner with the Government of Ethiopia and Ethiopian Electric Power to support the development of the country’s renewable energy sector,” said Manuel Moses, CEO of ATIDI.
“Through our liquidity support, this collaboration will not only reduce financial risks but also attract more investment into Ethiopia’s energy infrastructure. We believe that this partnership will help accelerate the growth of Ethiopia’s renewable energy capacity and contribute to the broader goal of sustainable development across the African continent.”
H.E Minister Ahmed Shide also noted that “Ethiopia has embarked on a comprehensive economic reform agenda known as the Homegrown Economic Reform Agenda (1&2). This initiative aims to address structural challenges and promote sustainable economic growth. The key aspects of the reform are creating Macroeconomic Stability; Investment and Trade.”
Efforts are being made to enhance the investment climate and promote trade by simplifying regulations, improving infrastructure, and encouraging private sector participation.
“The Regional Liquidity Support Facility (RLSF) is expected to play a great role by enhancing the bankability of PPP projects and the sustainable implementation of such projects,” H.E Minister Ahmed Shide added.
The deal is seen as a significant step towards achieving Ethiopia’s energy transition goals while ensuring financial stability for its power sector stakeholders.
Follow #RenewableEnergyAfrica for more updates.
Discussion about this post