SOLAR PARK
TP Nchocho
Group Executive:
Investment Banking Division
28 October 2010
Development Bank of Southern Africa
Table of Contents
 DBSA’s MANDATE
 PROBLEM STATEMENT
 ROLE OF DBSA IN SOLAR PARK
 FINANCING FRAMEWORK
 COORDINATING ROLE
 ENGAGEMENTS WITH FINANCIAL INSTITUTIONS
 NEXT STEPS
DBSA’s Mandate
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
• DBSA is a regional development finance institution that
operates throughout the SADC region.
• DBSA’s Mandate:
 To promote economic development & growth, human
resources development
and institutional capacity
building in the region.
 To support
sustainable development projects &
programmes in the region.
 Focus on economic, social and institutional
infrastructure and cooperation with the private sector.
• DBSA roles: Financier, Partner, Advisor, Implementer &
Integrator.
Next
Steps
Problem Statement
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
Next
Steps
• Solar Park to house large scale solar projects.
• Different technologies > at different stages of development.
• Aggregate funding requirements not fully quantified yet > FS
• However, significant level of debt & equity anticipated:
 Park Infrastructure,
 Transmission infrastructure, and
 Individual solar projects/ IPPs.
• Need for a Coordinated Approach.
• International players > the Ease to Do Business!
The Role of DBSA in the Solar Park
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
Next
Steps
• Financing framework ....convening a Working Group.
• Facilitating the Coordinated Approach to mobilize the funding
required from various sources.
• Coordinate project bankability assessments/ due diligences
to the extent required, based on financing framework agreed
upon.
• Assistance to the Northern Cape Provincial government and
the Municipality
– Institutional ; Technical ; Funding
• Assistance to other SOE’s that may have a role to play.
Financing Framework
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
Next
Steps
•
Set up a finance working group made up of local and international DFIs and
commercial banks.
•
Articulation of a coherent Financing Framework for IPP Plants including possible
funding models, options, and sources that are available in the RSA market.
•
Undertake an iterative financial analysis to quantify costs and benefits of various
financial instruments.
•
Development of Project Finance models for each of the solar technologies
proposed.
•
Develop an Info Memorandum (“IM”) for the Solar Park programme.
•
Determine commitment levels from financial institutions and identify
funding gap, if any.
•
Streamline the financing process and optimize financing terms.
Coordinating Role: ALL PARTIES
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
Next
Steps
• An Interface Platform between local and international
development finance institutions, commercial banks and
solar project developers.
• Coordinate Due Diligence (DD) activities and project
appraisal processes between Commercial Banks and DFI’s
to minimize duplication.
• Coordinate financial structuring and advise on appropriate
capital structures and instruments .
• Coordinate the processes to eventually club and
optimize commercial banks and DFI funding.
Engagements with Financial Institutions
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
• Generally interested in funding the Solar Park.
• Indicative funding criteria:
 Bankable PPA.
 Regulatory certainty.
 Confirmation of all required approvals including EIA.
 Proven solar technology.
 EPC contractor and Technology partner experience.
 Full EPC wrap.
 Equity availability.
• To potentially provide funding at project level or on a
consolidated basis.
• General willingness to work on a coordinated funding
approach.
Next
Steps
Next Steps
DBSAs
Mandate
Problem
Statement
Role of
DBSA
Financing
Framework
Coordinating
Role
Engagements
with banks
• Assist with the bankable feasibility study (“BFS”)
process.
• Establish a finance working group.
• Continue engagements with local and international
commercial banks, DFIs, and non-Bank funders.
• Engage all relevant parties on the risk allocation
framework for the project.
• Finalise the financing framework for the project.
Next
Steps
Thank you very much!