The Multilateral Investment Guarantee Agency (MIGA) has agreed to issue up to $34.56 million in guarantees covering Scatec Solar ASA’s (Scatec) equity investments in six Solar Photovoltaic (PV) power plants in the Northern and Eastern Cape Provinces of South Africa.
MIGA, part of the World Bank Group, issued a 15 years against the risks of Breach of Contract (BoC) and Transfer Restrictions & Convertibility (TR).
The project consists of the construction, ownership, and operation and maintenance of six Solar PV energy generating facilities in South Africa, as part of the government’s Renewable Energy Independent Power Procurement Program (REIPPP).
Three of the facilities, Kalkbult (75 MW), Dreunberg (75 MW) and Linde (40 MW) have been in operation since 2013 and 2014; while the Sirius (75 MW), Dyason’s Klip 1 (75 MW) and Dyason’s Klip 2 (75 MW) solar power projects reached their financial close in April 2018.
Construction is expected to commence later in 2018.
The projects are a category B under MIGA’s Policy on Environmental and Social Sustainability; for more information, please refer to the Environmental and Social Review Summary documents for rounds one and two, as well as round four of the project.
The projects will generate climate mitigation benefits by increasing renewable energy capacity and solar power’s contribution to the energy mix in South Africa.
The projects have an array of Economic Development Obligations enshrined in its legal agreements which include undertakings to 1) ensure minority shareholding in the project companies by local communities and economically disadvantaged groups; 2) create jobs with training and career development opportunities; 3) procure local content; and 4) contract with micro, small and medium-enterprises, women-owned, and ethnically minority-owned companies.
The projects are required to track and report its socio-economic development contributions as a percentage of revenues on a quarterly basis.