Insurance agency African Trade Insurance Agency (ATI) has provided the 60 MW Salima solar photovoltaic (PV) plant, in Malawi, with a revolving liquidity guarantee that can be drawn following any payment delays by the national offtaker, namely the Electricity Supply Corporation of Malawi (Escom).
ATI provided the $4.4-million liquidity guarantee under its regional liquidity support facility (RLSF) against the risk of delayed payment by Malawi power utility Escom.
The RLSF policy will be for an initial tenor of up to ten years. The liquidity cover being provided via RLSF will enable up to $78-million of total project financing.
The 60 MW Salima solar PV plant, developed by Canadian independent power producer JCM Power and one of the most advanced projects, will be instrumental for Malawi’s underdeveloped electricity sector, which has an installed generation capacity of about 439 MW. More than 90% of this capacity comes from hydropower plants on the Shire river, which results in supply constraints during time of drought.
Moving forward, there is high potential for solar and new hydropower technologies to enter into the power market, thanks to reforms by the Malawian government that have led to the establishment of a viable electricity market for private sector participation in generation expansion, ATI says.
The Salima solar PV plant is due to start operations in August. It will be the first solar PV plant in Malawi to connect to the grid.
The energy generated, at an estimated annual average of 154 GWh, will be sold exclusively to Escom under a 20-year power purchase agreement.