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The World Bank’s board of executive directors have approved $200 million Renewable Energy Guarantees Programme (REGREP) to mobilise International Development Association (IDA) guarantees under a Multi-Phased Programmatic Approach (MPA).

The programme will support the government of Ethiopia’s ongoing power sector reforms and leverage private sector financing for renewable energy generation.

REGREP will support the development of over 1,000MW of greenfield solar and wind energy Independent Power Producer (IPP) projects in Ethiopia, including the World Bank Group Scaling Solar initiative.

“REGREP comes at this critical juncture and signals the government’s commitment to comprehensive power sector reforms and a private sector led renewable energy development programme that has the potential to be one of the largest in sub-Saharan Africa,” said Rahul Kitchlu, senior energy specialist at the World Bank.

The REGREP marks the first IDA guarantees under deployment in Ethiopia. Enabled by the 2018 Public-Private Partnership Proclamation, this programme reflects a new way of doing business in the energy sector in Ethiopia - transitioning from continued public-financing towards private sector led competitively tendered procurement of new renewable generation capacity.  

Structural transformation in Ethiopia

The programme is fully aligned with the World Bank’s Country Partnership framework for FY18—FY22.

It will foster structural transformation for growth by enhancing private sector financing of infrastructure projects; build resilience and inclusiveness by increasing supply of electricity sustainably and help to manage the impact of climate change through diversification of energy sources.

“With the support of the World Bank Group, this programme will create a platform for much-needed private sector participation in the crucial energy sector by lowering the risks of investing in Ethiopia,” said Carolyn Turk, World Bank country director for Ethiopia, Sudan and South Sudan

“The programme has the potential to leverage over $1.5 billion in private sector investment,” Turk added.

In line with the Maximizing Financing for Development (MFD) approach, the World Bank Group’s support to Ethiopia’s IPP programme follows a sequenced approach under which financing and technical assistance for policy reforms have unlocked significant opportunities for private sector participation in the power sector.

The Energy Sector Management Assistance Program (ESMAP) provided support in terms of resource mapping and validation, as well as technical studies to identify areas for wind development.

To maximise the effectiveness of development results and make the environment for private sector investments more conducive, in addition to IDA guarantees, complementary instruments of the International Finance Corporation and Multilateral Investment Guarantee Agency will also be made available.