OPIC President Presents Framework for Energy Progress in Power Africa

(OPIC) ADDIS ABABA – Elizabeth Littlefield, President and CEO of the Overseas Private Investment Corporation (OPIC), presented a set of guidelines aimed at increasing private sector investment in the power sector in developing countries while speaking today at the U.S.-Africa Energy Ministerial, a landmark event co-hosted by the Governments of Ethiopia and the United States.

Produced in response to feedback from investors, developers, and governments, the document presented by Littlefield offers a ten-point framework of essential elements to making a power purchase agreement (PPA) bankable. Long-term offtake contracts between energy producers and governments are often the foundation for financing from development agencies and banks for power sector projects across the continent. This list of key PPA elements was developed collaboratively – and represents the consensus viewpoint of – OPIC, the U.S. Agency for International Development, the U.S. Department of Commerce, the U.S. Trade and Development Agency and numerous international development finance institutions.

“Bankable power purchase agreements are key to unlocking private and public sector capital needed to build generation capacity across the continent – which is the goal of Power Africa,” said Littlefield. “Sometimes simple is better and less is more. This framework outlines, on one page, the key elements for attracting financing to energy projects. This framework helps connects the people who benefit from increased energy access with the investors, financiers, and innovative project developers who have the resources to build power projects throughout the continent.”

OPIC is a key part of President Obama’s Power Africa Initiative which aims to double energy access on the continent by providing financing of more than $7 billion for 10,000 new megawatts of power. Power Africa’s whole-of-government focus on expanding power access across Sub-Saharan Africa involves large and small energy projects, many requiring the negotiation of a PPA.

The framework Littlefield presented at today’s meeting aims to accelerate this process by creating a basis for negotiation between private sector investors and African governments.

“An agreed-upon list like this benefits government, producer, and consumer,” added Littlefield. “Developers, lenders, and local governments can devote time and resources towards projects with shared expectations and clear paths for progress. OPIC and our U.S. Government partners have supported power projects all over the world, with a recent and distinct focus in Sub-Saharan Africa. A bankable PPA framework is the product of decades of work in power sector negotiation, and I’m confident this document can add efficiency and effectiveness to future power project development and negotiation.”

Features of bankable PPAs include controls like fixed tariffs and foreign currency exchange protection to ensure viable pricing, as well as key administrative mechanisms like dispute resolution and risk assignment for power transmission between generation source and consumers.

Learn more in a brochure featuring the 10 Elements of a Bankable PPA.