Ghana has signed up for a continental initiative aimed at providing cheaper power for its citizens through the new regional liquidity support facility (RLSF).
The West African nation recently signed a memorandum of understanding (MoU) with the Nairobi-based African Trade Insurance Agency (ATI) for the rollout of the facility. It is in line with the country’s mission to promote access to reliable, clean, and affordable electricity.
Ghana is the ninth ATI member State to sign the MoU, joining Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Togo, Uganda and Zambia.
Kenya is conspicuously missing from the list despite hosting the regional body. ATI noted in a statement that the MoU comes at a time when the demand for energy in Ghana is increasing by 10 per cent annually.
“Thanks to the MoU, IPPs (independent power producers) in Ghana will benefit from RLSF, which was not only created to help tackle climate change and attract investments by supporting renewable energy projects in ATI’s member countries but also to protect the IPPs against the risk of delayed payments by public off-takers,” noted ATI CEO Manuel Moses.
Data shows Ghana has one of Africa’s highest rates of access to power at 86.63 per cent, with 74 per cent of rural residents and 95 per cent of urban residents connected to the electricity grid.
Ghana also exports excess power to its neighbours - Benin, Burkina Faso and Togo.
The country, which has a total installed capacity of over 5,300 MW, aspires to modernise its agriculture and provide economic opportunities for its growing population.
“One of the key constraints to this vision is access to reliable and cost-efficient electric power and the sector’s current financial deficit,” said ATI.
“RLSF will, therefore, be available to relieve the financial burden of the national utility, the Electricity Company of Ghana (ECG), which is often asked to provide collateral for similar liquidity instruments under power purchase agreements.”
ATI was founded in 2001 by African States to cover trade and investment risks of companies doing business in Africa to specialise in providing political risk, credit insurance and, surety insurance.
Since its inception, ATI has facilitated up to Sh8.4 trillion ($70 billion) worth of investments and trade in Africa.
ATI has for over a decade maintained an A/Stable rating for Financial Strength and Counterparty Credit by Standard & Poor’s and in 2019, ATI obtained an A3/Stable rating from Moody’s.
Backed by German and Norwegian governments, RLSF is a joint initiative of ATI, the German Development Bank KfW and the Norwegian Agency for Development Cooperation (Norad) launched in 2017 to help tackle climate change and attract investments by supporting renewable energy projects in ATI’s member countries.