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Green energy investors get Sh100bn insurance boost

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A wind farm. AFP PHOTO

A Sh100 billion ($1 billion) fund backed by the European Investment Bank (EIB) has been set up to cushion investors in renewable energy projects from unexpected losses in sub-Saharan Africa.

The EIB has teamed up with the African Trade Insurance (ATI) and German insurance firm Munich Re to create the fund that will provide insurance against occurrences such as breach of contract, currency inconvertibility, war and civil unrest that could trigger investor losses.

“This exciting new partnership between the EIB, Munich Re and ATI combines technical, financial and sector experience and local knowledge essential to tackle investment barriers,” EIB regional representative Catherine Collin said in a statement.

The fund is set to help reduce African governments’ debt exposure since they have often been forced to provide sovereign guarantees to investors through letters of support that cushions private investors from unforeseen political and economic risks.

READ: Kenyan lenders take front seat in green growth

Kenya, which has issued such guarantees for renewable energy projects, has booked them as national debt, pushing up the country’s debt stock.

Developers of the defunct Kinangop Wind Park sued Kenya for Sh15 billion after the Treasury-backed project collapsed under the weight of political pressure.

“This (insurance) facility is particularly important because it reassures financiers and investors in the energy sector in Africa that their investments are fully covered and safe and this eventually ensure the production of cheaper energy which benefits the final energy users,” said Energy principal secretary Joseph Njoroge during launch of the fund in Kilifi.