The Asian Development Bank (ADB) has approved an umbrella facility of up to USD 100 million (EUR 88.8m) to encourage private sector investments in renewable energy projects in Pacific island countries, the lender said Tuesday.
The facility scheme will include loans, guarantees and letters of credit to support the Pacific Renewable Energy Programme. In turn, the programme will bankroll five separate renewable energy projects in ADB’s Pacific developing member countries over a five-year period. The ADB’s Pacific Department (PARD) and Private Sector Operations Department (PSOD) will be in charge of the programme’s implementation. One project has already been identified and its financing plan is under discussion.
The ADB’s goal is to offer incentives to private investors to build clean energy capacity in the Pacific region and, over time, reduce local power utilities’ dependence on grants and subsidies. So far, private investments in project development have faced setbacks due to a lack of governmental credit support for utilities’ payment obligations, absence of profitable power purchase agreements (PPAs), uncertainties over foreign currency availability and convertibility, as well as perceived political risks, the ADB said.
(USD 1.0 = EUR 0.89)
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