Renewable Fund Guarantee

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The objective of the Renewable Fund Guarantee Project for Argentina is to increase electricity generation capacity from renewable energy sources through private investment in the energy sector. The project has one component: an IBRD guarantee in an aggregate amount of US$480 million to backstop Government’s failure to fund FODER when it should pay a put price to eligible renewable energy sub-projects as a result of IPPs exercising a put option under their respective FODER trust adhesion agreement. At the sub-project level, the guarantee is limited to a maximum of US$500,000 per MW. The project involves a financial intermediary structure conformed by BICE, in its capacity as trustee of FODER, and MEM as implementing authority of FODER.25 The IBRD guarantee indirectly mitigates country risks (including lack of payments, change in policy, convertibility, and transferability risks), and thus reduces financing costs for IPPs and risks associated with signing PPAs with CAMMESA. In the medium term, the guarantee will allow Argentina to rebuild a positive track record with investors.