ATIDI signs partnership agreement to underwrite AMEA Power’s 20 MW Solar Project in Uganda

African Trade & Investment Development Insurance, ATIDI, announced its intent to support the 20 MW Ituka West Nile Uganda Ltd solar project developed by AMEA Power, a Dubai-based Independent Power Producer (IPP).

ATIDI will support the project via its Regional Liquidity Support Facility (RLSF) by providing payment guarantees for the benefit of the project on behalf of the Ugandan national power utility, Uganda Electricity Transmission Company Limited (UETCL).

 The partnership was announced in a signing ceremony on the margins of the 28^th Conference of the Parties to the UN Framework Convention on Climate Change (COP28) in Dubai; underscoring ATIDI’s commitment to risk mitigation and project resilience in the dynamic landscape of sustainable energy initiatives.

Commenting on the deal ATIDI CEO Manuel Moses thanked AMEA Power for serving as catalysts for energy independence in Uganda.

“At ATIDI, we believe in fostering sustainable development, and one crucial avenue is supporting IPPs who propel diversification of Africa’s energy mix. Over the past years, Uganda has demonstrated remarkable strides in its energy sector, and we are proud to play a role in this transformative journey. Our recent collaboration with IPPs in Uganda is not just about power generation; it’s about empowering communities, driving economic growth, and fostering a sustainable future”.

 AMEA Power Senior Director for Project Development Aqueel Bohra said investing in renewable energy in Uganda was part of the company’s pledge to deliver sustainable energy to all.

“We thank ATIDI for their support, which is crucial for the success of the project. Our solar project will not only help provide essential power to homes and industries but will also drive economic growth, creating jobs, and safeguarding the environment.”

The RLSF policy, which will be in place for an initial tenor of 15 years, will cover up to six months’ worth of revenue for the IPP; signing of the RLSF policy is subject to the two parties agreeing on a final form of the policy documents to either party’s satisfaction. The electricity generated by the power plant will be sold to UETCL under the terms of a 20-year Power Purchase Agreement (PPA); once constructed, the project will connect to the national grid via a new high-voltage transmission line run by UETCL.

 RLSF is a liquidity instrument provided by ATIDI to renewable energy IPPs that sell the electricity generated by their projects to state-owned power utilities in ATIDI member states that have signed the RLSF Memorandum of Understanding. It notably protects small and mid-scale renewable energy projects against the risk of delayed payments by public offtakers. A joint initiative of ATIDI, KfW Development Bank and the Norwegian Agency for Development Cooperation (Norad), RLSF was created to help tackle climate change and attract investments by supporting renewable energy projects in ATIDI’s member states.

This will be the first project considered for RLSF cover under Phase 2 of the initiative. Phase 1, which involved the issuance of a Standby Letter of Credit by a commercial bank as part of the product structure, was successful; supporting five renewable energy projects in Burundi, Malawi and Uganda. The 7.8 MW Nyamwamba II Run-of-the-River project, the one operational project that has benefited from RLSF support in Uganda, continues to perform well with no payment delays from UETCL.

 Uganda has made positive progress in increasing the electricity access rates, with annualized increases of 3% between 2010 and 2020. The electricity access rate currently stands at 42%, which is a notable improvement from the national access rate of only 12% in 2010. The national installed capacity stands at 1,346 MW, with the bulk of this being from hydro powered projects, leaving the country vulnerable to the negative impacts of climate change in the event of any prolonged drought that would result in poor electricity generation.