Standard Bank sets aside R20bn for renewable energy

Standard Bank has committed R20 billion towards funding identified renewable energy projects and yesterday declared that it had the resources to fund more initiatives for the new Renewable Energy Independent Power Producer (REIPP) procurement programme allocations. This was after Standard Bank and the Industrial and Commercial Bank of China (ICBC) signed an agreement to fund R20bn worth of renewable energy projects. Standard Bank, which is 20 percent owned by ICBC, said that in the next bidding window and as the REIPP programme had been extended, it was looking for a bigger share of projects to support.

“We have considerable appetite for renewable energy projects and our arrangement with ICBC will enable us to lend to more [projects] than in the past,” said Alastair Campbell, Standard Bank’s head of power finance. Standard Bank supported 22 renewable energy projects during the first REIPP bidding window and half of those were chosen as preferred bidders. The 11 projects, consisting of five wind and six photovoltaic (PV) projects, required combined funding of R9.4bn During the second window period, of the 29 projects backed by the bank, six were chosen. These projects included a variation of wind, concentrated solar power and PV technology.

The R20bn funding support agreement, signed yesterday, would fund these projects. Those selected during the second bidding process were required to reach a financial close towards the end of this month, while window one projects reached a financial close last year. By financial close the projects should have a legally binding commitment of debt financiers to provide them with funding. Standard Bank had been involved in these projects before bids were submitted and provided credit-underwritten funding packages for them. The bank had six months after the preferred bidders were chosen to wrap up the financial close process.

Campbell said the funding packages covered the entire project from development to construction and running costs. He said ICBC would only fund the projects where Standard Bank was or would be mandated as a lead arranger. For projects with Chinese content, 80 percent of the funding would come from ICBC, while those with no Chinese content or involvement would be co-funded on a 50-50 basis by Standard Bank and the ICBC. Campbell said some projects might have local content, but the ICBC would fund them like those with Chinese content, if there was involvement of Chinese consultants or other personnel.

ICBC chairman Jiang Jianqing said the bank was interested in raising awareness of South Africa’s investment opportunities among Chinese suppliers as potential sources of contracting capability. The objective of the funding partnership with Standard Bank was to facilitate the entry of investors into South Africa. “ICBC sees itself as an important partner of the South African government in its developmental ambitions,” said Jiang. George Kotsovos, the head of power and infrastructure finance at Standard Bank, said without the ICBC partnership, liquidity could have become a problem for the bank as companies’ interest grew during the third bidding window.

Submissions for the third and what was expected to be the final window, will close on August 19. But the Department of Energy confirmed that the REIPP programme would be extended and 3 200 megawatts would be procured by 2020. Standard Bank shares closed 0.9 percent up at R119.45.