Regional Initiative for Sustainable Energy
Presentation of UEMOA funding arrangements for the implementation of its regional strategy
to increase electricity supply
Mrs. Safietou DIALLO
Technical Advisor
Problematics
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
• Funding SDEs becomes a strategic issue and the major concern for utilities,
because of the importance and the size of required investments both for
upgrading power generation and distribution infrastructure and covering the
need to increase supply to meet sustained demand. They require significant
resources at rather low interest rates to be amortized in the long term.
Operators from the African power sector face substantial production shortfalls,
very significant increase in fuel costs due to the prohibitive cost of the oil barrel
operators are faced with. This destabilizes their operations due to higher
generation costs. The drop in the sector’s performance and profitability is
reflected in the lack of continuity in the provision (important and recurring
power cuts) and a sharp deterioration in service quality. Furthermore, the
income regulation system, its enforcement and arbitrations rarely allow
companies to restore their operating balance through prices.
5.Mechanisms
6.UEMOA/IRED
Regional Fund
To break this vicious circle, “UEMOA” has defined a sustainable strategy to
absorb the deficit of electricity in the short, medium and long term, through a
dedicated funding mechanism and a 2010-2012 emergency component.
Mrs. Safietou DIALLO
Presentation of IRED
•
The power energy crisis prevailing in many EU countries worsened in 2008,
resulting in a significant slowdown in economic activities in these countries.
Given this situation, the Heads of States and Government of the UEMOA opted
for a community approach to implement solutions. At their meeting, in March
2009, they decided to launch the Regional Initiative for Sustainable power
(IRED).
•
IRED's vision is to enable all UEMOA citizens to have access to clean and lowcost energy, produced within an integrated and harmonized market across West
Africa and based on a dynamic public-private partnership. The IRED consists of
two components: an emergency component and a medium and long term
component.
•
For financing the emergency program, the Electric Power Development Fund
(FDE) was established, with an expected allocation of FCFA 500 billion, of which
250 billion constitute the contribution of Union institutions, the other half is to
be sought from development partners. BCEAO’s additional contribution to the
Fund amounts to 190 billion and that of the UEMOA Commission to 60 billion.
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
The IRED is based on an institutional mechanism including the Steering
Committee, the Board of FDE Donors and the Technical Monitoring Committee
(STC). This mechanism is placed under the authority of the President of the
UEMOA Commission, the Governor of the Central Bank and the President of
UEMOA.
Mrs. Safietou DIALLO
Presentation of IRED
To implement the IRED, there is an adequate funding mechanism consisting of two components:
concessional and private equity funds.
1.Problematics
Concessional Fund:
2.Presentation of
IRED
3.Funding
Electric Power Development
Fund (FDE)
Arrangement and
Key Actions :
• Amount: FCFA 500 billion
Additional funds: Effective initial allocation of
FCFA 250 billion (BCEAO, UEMOA, BOAD), the
rest is expected to be provided by donors,
concessional fund managers and bilateral
cooperation agencies
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
« Infrastructure » Fund
Private Equity Fund
• Targeted amount: FCFA 1,000 billion
• FDE symbolic contribution : FCFA 15 billion
Mrs. Safietou DIALLO
Funding Arrangement and Key Actions: Targeted Objectives
IRED
• Ensure the financial restructuring of utilities
• Provide funding for the emergency plan
•Attract significant private investment to fund strategies in the
medium and long terms
•Support the financing of the upgrading of national power
systems
3.Funding
• Establishment of an Electric Power Development Fund
1.Problematics
2.Presentation of
Strategic Objectives
• The Fund will grant concessional loans.
Arrangement and
• The Fund will finance the restructuring, the emergency
program and projects in the medium and long term.
Key Actions :
• The Fund will provide an additional amount to the
Investment Fund reaching up to 15% of its total value.
Targeted
• Establishment of an Investment Fund
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Key Actions
• The Fund will be provided with an additional
contribution of up to 15% by the Electric Power
Development Fund and of 85% by private partners.
• The Fund will finance the restructuring, the emergency
program and projects in the medium and long term .
• Organization of a round table and a tour of development
partners and donors with a view to financing the electricity
sub-sector.
Mrs. Safietou DIALLO
Global Diagram of the Funding Mechanism devoted to the UEMOA
Power Sector
Global diagram consists of a Power Sector Regional Development Fund, an Infrastructure Fund
devoted to electricity and banking.
1.Problematics
2.Presentation of
IRED
3.Funding
Electric Power
Development
Fund
(i) BCEAO, BOAD,
UEMOA
Commission
(ii) Donors
Arrangement and
Private
partners
1.5% symbolic
contribution
(ii)
Participation of the Electric Power
Development Funds
Additional contribution of
community and international private
sector (UEMOA is the project owner)
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
v.
vi.
Local banks
Insurance
companies
Donors
Retirement
Funds
Oil
companies
Others
Participations/loans
and guarantees
Targeted
iii.
iv.
Infrastructures funds
(i)
Key Actions :
85% participation
i.
ii.
Restructuring/
Rehabilitation
Emergency plan
funding
Medium, long-term
project financing
Mrs. Safietou DIALLO
Detailed Diagram of the Electric Power Development Fund
Electric Power
Development Fund
1.Problematics
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
(i) Community
institutions: BCEAO,
Concessional resource/grant BOAD, UEMOA
commission;
allocation
(ii) Donors.
•
•
•
•
Restructuring/ rehabilitation
Studies for investment projects
Diagnostic studies, financial audits…
Business plan development and
implementation
• Technical assistance for rehabilitation
• Social Plans
• Balance and equipment subsidies
Objectives
4.Diagrams
Participation/loans and
guarantees (concessional
conditions )
2.Presentation of
Market resource
allocation (Private equity
funds)
Financing power generating
projects
• Emergency plan
• Medium/long-term project
financing
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Electric Power
Companies
Utilities
IPP (Private producers)
Communities running power resource sharing projects
CEB (Electric Community of Benin)
OMVS – OMVG (Organisations for the Development of
the Senegal and the Gambia Rivers)
Other initiatives
Solar power
Funds
…..
Participation/loans and guarantees (in line with market
conditions )
Mrs. Safietou DIALLO
Detailed Diagram of the Infrastructure Fund
The "Infrastructure“ Fund is a profit-seeking private equity fund and it mainly operates in line with
market terms and conditions.
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Electric Power
Development Fund
(concessional resources)
(i)
States, BCEAO, BOAD,
UEMOA Commission
(ii) Donors
15 %
contribution
Iinvestment Fund
(i)
Key Actions :
Targeted
(ii)
Objectives
15% contribution
from Electric
Power
Development Fund
85% contribution
from private sector
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Participation/lo
ans and
guarantees
4.FDE and
85%
contribution
Private partners
(market resources)
Local banks
Insurance
companies
Donors
Retirement fund
Oil companies
Others
Infrastructure
Fund Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
National Power
Companies, PPP
Communities
OMVS, OMVG, CEB, and other
regional electric power pooling
Thematic funds
(solar, biomass…)
Mrs. Safietou DIALLO
Funding Mechanism Devoted to the UEMOA Power Sector: Resources,
Partnerships and Governance Rules
1.Problematics
Private partners provide both financial resources and corporate governance expertise. Their
ambition will include encouraging the companies they invest in to seek listing at the Stock
Exchange.
2.Presentation of
IRED
Arrangement and
Key Actions :
Market Resources
Targeted
(i)
(ii)
(iii)
Objectives
Restructuring
Emergency Plan
Medium/Long-term projects
4.Diagrams
5.Mechanisms
(i)
(ii)
(iii)
(iv)
(v)
(vi)
Private partners (market
resources )
Local banks
Insurance companies
Donors
Retirement Funds
Oil companies
Others (the Public)
Participation/loans
and guarantees
3.Funding
Governance rules
(i)
(ii)
(iii)
(iv)
Participation in Board
meetings .
Independent General
Directorate.
Development of procedures
and
Management
information Systems (MIS).
Preparation
for
listing
(bringing
accounting,
profitability,
solvency
requirements as well as the
remuneration
of
equity
capital up to standards)
6.UEMOA/IRED
Regional Fund
Public utilities, IPP
Communities
OMVS,CEB,
Liptako-Gourma etc.
Thematic funds (solar,
biomass…)
Mrs. Safietou DIALLO
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Some rules of good governance required for the intervention of the Electric
Power Development Fund in the programs for restructuring electricity
operators
•A Board of Directors that is separate from public authorities comprising
competent resources that are familiar with the sector .
•A General Directorate working on the basis of a business plan (budget, goals
...)
•Development of a sound Management Information System with reliable
operating boards.
•Establishment of Audit Committees and recruitment of an Internal Auditor
under the supervision of the Board.
•External auditing of accounts and financial statements by an independent
auditor that is internationally recognized as competent.
•Save the company’s income from losses (satisfactory recovery of receivables,
development
of
prepayment
and
fraud
control)
•Ultimate preparation for listing at the Stock Exchange (bring accounting,
profitability, solvency requirements as well as equity capital up to standards)
Mrs. Safietou DIALLO
Electric Power Development and Infrastructure Funds Intervention Mechanism
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Electric Power Development Fund (Concessional) Intervention Mechanisms
The Fund especially provides total or partial loan guarantee
It can provide grant or subsidy thresholds, if necessary
 Exceptionally, the Fund may grant direct pre-funding to accelerate projects (when lenders have
approved funding agreements that are delayed by administrative procedures)
 The Fund will facilitate the settlement of arrears by providing payment and guaranteeing
rescheduling agreements (debt restructuring)
 The Fund will facilitate the development of special funding arrangements to ensure an efficient
supply of fuel in case of absolute necessity
Investment Fund Intervention Mechanisms
 The Fund will be the crucible for all the actions of electric power partnerships (including PPP
with resources from the Energy Development Fund, the resources mobilized from various
technical and financial partners, resources from bilateral and multilateral partners)
 The Fund receives an additional contribution amounting to 15% from the Electric power
Development Fund and 85% from the private partners
 The Fund provides guarantees, senior loans, subordinated loans (quasi equity)
 The Fund also intervenes in terms of participation in electric power companies, electricity
companies created as part of electric communities such as OMVS, CEB, OMVG, and of thematic
Funds as well
Private Partners Intervention Mechanisms
 Private partners provide the necessary funding for heavy investments in the electricity
subsector
 The private sector enables to create an attractive business environment because utilities and
electric communities shall meet good governance requirements and establish an attractive
legal, fiscal and cyclical framework.
Mrs. Safietou DIALLO
Funding Mechanism Devoted to the UEMOA Power Sector: Possible
Funding Sources
Some Funding Sources
1.Problematics
Different Possible Funding Sources
2.Presentation of
Mobilizing Immediately Available Resources in (one year) the UEMOA
IRED
Arrangement and
Community Action Fund (F.A.C.)
Results (dividends payable) to BCEAO, balance brought forward, certain optional and available
reserves
UEMOA Commission Structural Funds (PCS ...)
Key Actions :
Short Term Resource Mobilization (1-2 years)
3.Funding
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Uncommitted or unpaid WAPP credit lines (e.g. World Bank APL)
AFD, EIB, EDF, ADF, UEMOA: possibility to guarantee electricity-related bonds
Direct borrowing from traditional donors: ADB/ADF, EDF, IDB, BADEA, WB/IDA, IFC, USAID ...
Medium and Long Terms Resource Mobilization (3 to 12 years)
AFD, EIB, IFC: possibility to guarantee electricity-related bonds
Direct borrowing from ADB, EDF, WADB, IDB, etc..
Regional Integration Aid Fund (RIAF): Funding possibilities for projects
Mrs. Safietou DIALLO
UEMOA/IRED REGIONAL FUND
• Assessment of Fund Activities
1.Problematics
•
Status of available resources under its emergency component and
IRED implementation status.
•
Initial contribution of 250 billion
•
As of October 25th 2011, the amount of available resources under FDE amounted to FCFA
138,789,608,392
•
4 countries have received 173 bns as part of the intervention of the Fund
•
Loan agreements that were signed, for most countries, since 22 January 2011 have not
become effective.
•
Indeed, only loan agreements for Burkina Faso, Mali, Niger and Senegal have been
formally approved by their parliament.
6.UEMOA/IRED
•
In addition, resource disbursement requirements are not yet removed.
Regional Fund
•
This explains why, to date, no disbursements is made.
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
Mrs. Safietou DIALLO
UEMOA/IRED Regional Fund
• IRED Implementation Status
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
•
•
•
•
•
•
•
•
•
•
The FDE has approved funding for projects up to a total amount of
FCFA 173,586,000,000 broken down as follows by country :
Benin: 20 billion ;
Burkina: 20 billion ;
Côte d'Ivoire: 25 billion ;
Guinea-Bissau: 13,705 billion ;
Mali : 20 billion;
Niger: 20 billion ;
Senegal: 34,881 billion ;
Togo: 20 billion
The projects funded include emergency plans.
Case of Senegal: 225 kV loop and containerized groups.
Regional Fund
Mrs. Safietou DIALLO
UEMOA/IRED Regional Fund
1.Problematics
2.Presentation of
IRED
• Actions planned to accelerate IRED
implementation
3.Funding
Arrangement and
•
Following consultations between the Governor of the Central Bank and the
President of the UEMOA, held as a fringe meeting during the regular
session of the Union’s Ministerial Council on September 12th 2011 in Dakar,
the following due diligence is envisaged to speed up the implementation of
the IRED: sending a UEMOA awareness mission to the States, with a view to
step up the necessary loan disbursement procedures.
•
Re-launching external funds mobilization missions to development
partners, in order to complement internal resources.
•
Accelerating procedures for the establishment the private equity fund
focused on financing UEMOA energy infrastructure.
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Mrs. Safietou DIALLO
UEMOA/IRED REGIONAL FUND
Lessons to learn
1.Problematics
2.Presentation of
IRED
3.Funding
Arrangement and
Key Actions :
Targeted
Objectives
4.Diagrams
5.Mechanisms
6.UEMOA/IRED
Regional Fund
Mrs. Safietou DIALLO
QUESTIONS
Thank you for your
attention