MIGA will offer guarantees of up to $18 million to support the construction, operation and maintenance of two 5 MW projects; Ejuva one and two, to be located in Namibia.
The guarantees will help the projects secure long-term financing, offsetting the risks of expropriation, transfer restrictions and inconvertibility, breach of contract and war/civil disturbance. The projects are being financed with a $15 million non-shareholder from South African bank, Investec, and $3 million in equity investment from infrastructure investor, CIGENCO.
Both sets of financing are provided in South African Rand. MIGA’S guarantees will cover 95% of the loans and 90% of the equity investment.
The two PV plants already have 25-year PPAs, having won bids under Namibia’S Interim Renewable Feed-in Tariff (REFIT) program. Electricity will be sold to national utility, NamPower at a price equivalent to $0.11/kWh. MIGA’s financial guarantees will also cover breach of contract on these PPAs.
Namibia has several small PV projects such as these under construction, which are seen as a solution to distributing electricity to the country’s widely spread population. A 45.5 MW PV plant is also underway south of the capital Windhoek, and is expected to meet around 3% of the country’s electricity demand once completed.
Currently, Namibia has two PV projects in operation, the 5 MW Otjozondjupa Park and the 4.5 MW Omburu Park. In 2016, 68% of electricity consumed by Namibians was imported, primarily from South Africa.