Ghana has signed a Memorandum of Understanding (MoU) with the African Trade Insurance Agency (ATI) for the rollout of the Regional Liquidity Support Facility (RLSF) within the country.
The deal will see Ghanaians have access to more reliable, clean, and affordable electricity in the country
This comes against the backdrop of the energy demand in Ghana which has been on the increase, currently standing at ten percent per year as the country focuses on expanding the contribution of renewable energy sources to the country’s energy mix.
RLSF, a joint initiative of ATI, the KfW Development Bank and the Norwegian Agency for Development Cooperation (Norad), is a financial product that is designed to address the short-term liquidity risks faced by small and medium-sized Independent Power Producers (IPPs) that sell electricity to state-owned power utilities – improving bankability and helping such projects reach financial close.
With the MoU in place, IPPs in the country 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.
Ghana has one of Africa’s highest rates of access to electricity at 86.63 percent with 74 percent of rural residents and 95 percent of urban residents connected to the electricity grid.
It also exports excess power to the neighboring countries of Benin, Burkina Faso and Togo. Additionally, the country, which currently has a total installed capacity of over 5,300 MW – aspires to industrialize, modernize its agriculture, and provide economic opportunities for its growing population.
There are, however, existing challenges including access to reliable and cost-efficient electric power, and the sector’s current financial deficit.
RLSF was institutionalized 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.
Ghana is the ninth ATI Member State to have signed the RLSF MoU – joining Benin, Burundi, Côte d’Ivoire, Madagascar, Malawi, Togo, Uganda and Zambia.
ATI has 20 member states including Kenya, South Africa, the Democratic Republic of Congo (DRC), Zambia, Uganda, Zimbabwe, Togo, Tanzania, Senegal and Rwanda.
Other members are Niger, Malawi, Madagascar, Ethiopia, Cote d’Ivoire, Cameroon, Burundi and Benin