Absa secures mandates worth R10.8bn in third batch of SA's renewable energy projects  


The Corporate and Investment Banking division of Absa Bank Ltd (Absa), member of Barclays, will provide R10.8 billion worth of debt funding to a total of six projects, including Wind, Solar PV and Concentrated Solar Power under the third round of the Independent Power Producer (IPP) Procurement Programme, following the announcement on October 29, 2013 of the preferred bidders by the Department of Energy (DOE).

This is approximately a third of the total debt that is being committed by South Africa's commercial banks, positioning Absa as one of the largest funders under the third round of the Renewable Energy Independent Power Producer Procurement Programme (REIPPPP). Last week the DOE announced that a total of 17 projects across various technologies achieved preferred bidder status in the latest round of bidding. The 17 projects are expected to produce approximately 1,472MW's of renewable energy per year once they are up and running.

Absa acted as a mandated lead arranger and as lender to projects totalling a combined annual power output of 635MW's including 360MW's of onshore wind, 200MW's of Concentrated Solar Power (CSP) and 75MW's of Solar Photovoltaic (PV) power.

Theuns Ehlers, Head of Resource and Project Finance at Absa, says this represents a significant commitment from the bank to the establishment of a renewable energy sector in South Africa. "We will be ready to disburse funding as soon as all documentation is finalised and hedges are closed. We are pleased that we will be financing three out of the seven wind projects, both of the CSP projects and one of the six PV projects, amounting to a total debt commitment of R10.8 billion," says Ehlers.

"This shows that there is still a significant appetite from developers and banks to invest in renewable energy projects in South Africa. Absa started working very closely with a number of local and international independent producers from the time the government announced its IPP plan a few years ago. We took a proactive approach and we are delighted that our early involvement has been rewarded by the number of deals we secured out of this round."

"The successful conclusion of the third procurement process has been very exciting and a big step forward in attracting local and international private players into South Africa's energy mix. We are encouraged by the fact that this was a highly competitive and open bidding process. Hopefully this success will also be a catalyst for other programmes, such as co-generation and cross-border IPPs," says Ehlers.

All winning bidders are expected to sign project agreements with the Department of Energy by July 30, 2014, bringing to a close South Africa?s third round of the IPP programme which began almost a year ago. Developers will have about one month from the date of signature in which to finalise all documentation and foreign currency hedging after which projects can be rolled out.

The fourth bidding round is expected to commence in July 2014 and will be finalised a year later, where a portion of the 3,725MW's on offer will be allocated. In line with the country's long-term power plan, South Africa aims to secure a total of 17 800 MW of renewable energy or 42% of South Africa's new generation capacity by 2030.


Prepared by:
Bheki Mpofu
FTI Consulting
011 214 2409
083 552 2109

More information:
Graeme Coetzee
Marketing and Corporate Communications,
Corporate and Investment Banking, Absa
011 895 6695
079 6959798

About Corporate and Investment Banking at Absa:

Corporate and Investment Banking, a division of Absa Bank Limited (Absa) and a member of Barclays, is a leading South African corporate and investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.

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