Regional Liquidity Support Facility

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The Regional Liquidity Support Facility (RLSF) covers short-term payment risks for private renewable energy projects (Renewable Energy Independent Power Producers, RE-IPPs). The RLSF thus addresses a central problem in the financing of these RE-IPPs. The RE-IPPs conclude power purchase agreements with the - usually state-owned - electricity suppliers, normally for a period of 20 years. For this period, this contract secures the purchase of electricity at fixed tariffs and thus provides the project with predictable income, which is the prerequisite for financing the project by investors. However, the state-owned electricity suppliers represent a high political and economic risk for many investors. The investors in the RE-IPPs therefore demand long-term guarantees combined with short-term liquidity support to secure the payment obligations of the electricity suppliers. Many RE-IPPs on the African continent are currently not completing because neither the electricity utilities nor the RE IPPs have the necessary liquidity to provide the short-term cash collateral.