Key factors for project finance, potential risks, mitigation tools and more discussed during webinar held by BonelliErede in collaboration with RES4Africa Foundation
BonelliErede, a leading international law firm, along with the RES4Africa Foundation, an organization dedicated to promoting renewable energy in Africa, recently held a webinar which covered the management of bankability issues regarding renewable energy projects in Ethiopia with governmental counterparties.
The latest in a series of such sessions organized by BonelliErede, it covered important points including the key factors for project finance, potential risks, mitigation tools and more. The agenda of the seminar was shared by Managing Associate at BonelliErede, Michele Saponaro, who then gave the floor to H.E Tsion Teklu, State Minister at the Ministry of Foreign Affairs of Ethiopia, and Andrea Pascali, Deputy Head of the Consular Chancery, First Secretary of the Italian Embassy in Ethiopia, to deliver the opening remarks.
H.E Tsion Teklu and Mr. Pascali spoke at length about the potential of renewable energy to combat climate change and the lack of energy security in Ethiopia, in addition to the government’s willingness to embrace the transition from biomass to more sustainable alternatives.
Duncan Keil, Managing Partner of Africa FX led the discussion that involved Riccardo Bicciato, Partner at BonelliErede, and Matteo Cavadini, Head of Business Development East and West Africa – Enel Green Power.
Riccardo Bicciato touched on several matters in his presentation, including:
- How the cost of capital remains a crucial element in every renewable energy investment decision and can significantly influence the business case of a project;
- Outlining the different risks associated with preconstruction and construction/ operational phases, such as legal and regulatory frameworks, land permits with the former and environmental, political, and financial risks with the latter;
- The best approach to mitigate such risks, with the core approach being to share the burden among the parties that are best placed to handle them efficiently;
- Why failing to allocate risks properly can have serious consequences ranging from deterioration of the terms and conditions of the financing, and increase of overall spending, to the project being delayed or outright cancelled.
Matteo Cavadini, followed with an overview on:
- Macro country factors that impact project bankability such as a stable political environment, well defined energy policies, a healthy financial structure, and clear legal and regulatory frameworks;
- Proper tender processes for projects such as only allowing reputable bidders to be involved with no free-riders or speculative bidders, no material changes to the tender process close to the submission date or after being awarded, watertight timelines and sound governance of the entire process;
- The need for Ethiopia to have a comprehensive renewable energy plan and roadmap to achieving targets, in addition to more independent bodies that can support the government with procurement procedures.
Closing marks were delivered by Antonio Passero, Sub Saharan Program Manager at the RES4Africa Foundation, who stressed the importance of the private sector working with the Ethiopian government to see that renewable energy projects come to fruition in the nation.
Commenting on the webinar, Riccardo Bicciato said “Ethiopia embarked on a bold journey when it announced its Climate Resilient Green Economy (CRGE) Strategy, with objective of transitioning the nation into a climate resilient green economy by 2025. The significant opportunity for renewable energy to form a key pillar of this plan is clear, however project finance issues associated with such projects pose a threat to their viability. At BonelliErede, we remain committed to counseling clients on how to overcome these hurdles with practical mitigation actions. It is our firm belief that together with private lenders and leading energy players, we can help Ethiopia drive the most value from its natural resources and ensure energy security for its people for years to come.”
“Ethiopia has a huge potential in terms of photovoltaic, hydroelectric, geothermal and wind energy.” commented Roberto Vigotti, RES4Africa’s Foundation Secretary General “To exploit the renewable resources of this country is the strategy to pursue and guarantee its sustainable development. Both the public and private sectors play a crucial role in this process and promoting this type of synergies is at the heart of the work that RES4africa carries out together with its partners.”
BonelliErede has been operating in Africa since 2016 with offices in Cairo and Addis Ababa. In Ethiopia, the law firm operates in cooperation with Tameru Wondm Agegnehu Law office. The team is headed by Gianpiero Succi, partner at BonelliErede, and Tameru Wondm Agegnehu, Founding Partner of Tameru Wondm Agegnehu Law office in cooperation with BonelliErede and Of Counsel BonelliErede. It is composed of an integrated group of around 10 lawyers who offer a complete range of legal services to international investors and major local corporations.
Source: RES4Africa