Confidential ADDRESSING CHALLENGES in PPP in the Power Sector A Private Sector Perspective The High Level Workshop on Public Private Partnerships Implementation in the Energy Sector in Africa: Challenges, Best Practices and New Trends Jason Rosamond CEO Good Earth Power Addis Ababa | Ethiopia June 30 – 1 July, 2011 Copyright © 2010 Good Earth Power. All rights reserved

Confidential Table of Contents The Challenges of Financing Power and Green Technologies in Africa The Responsibilities of PPP Partners: IPPs, Governments, Financiers, Institutions Case Study: Mozambique 2

Confidential The main challenges in African power sector PPP: A private sector perspective 3 Green Technologies are not the Status Quo Governments, institutions, financiers, and the ‘old guard’ focus on what they know – ‘Proven’ technologies and projects Proven technologies, however, do not address many of the needs of governments ‒ Implementation timelines ‒ Environmental policies ‒ Off-grid capabilities / Rural electrification Green Technologies address some of these issues but face their own challenges ‒ Sub-scale and therefore marginalised in discussions ‒ Still being developed in the West where tariff incentives are higher ‒ Financiers still taking the ‘low hanging fruit’ – why invest in less attractive investments in Africa given all of its challenges when I can still invest in Europe ‒ Governments are still seeking ‘free’ implementations, concessionary loans, world bank approvals – none of which are tied to ‘unproven’ green technologies How do we join hands in PPP to overcome these challenges

Confidential The green technology IPP must play a role, but needs to be armed for battle 4 The right technology – clean and green The right price – it must be competitive with fossil fuel alternatives Favourable implementation timelines – months, not years Proven track record elsewhere – a first time pilot in Africa is unrealistic Insurance package: EPC insurance and performance warranty Financing package: bring a financier to the table, at least in principle with a self-financing model Scalable: it must be capable of making an impact EPC partner: proven global EPC partner to ensure implementation success Overcome the hurdles before they arise

Confidential The government must rise to the challenge…for the right IPP 5 Provide government guarantees with collateral if necessary ‒ The government is responsible for collecting payment from end customers (unlike ICT), so out of IPP control ‒ As the IPP I bring a guarantee to the partnership, so should government Publish REFIT tables ‒ Don’t worry about IPPs making too much profit – publish what you can afford ‒ Implement social scorecard to catch ‘excess profit’ New business models – subsidise local consumption with industry purchase and export ‒ Establish bi-lateral agreements on behalf of PPPs with IPPs ‒ Go in partnership with IPPs to industry players to generate shared returns from which government subsidises local power Introduce promising new technologies to ‘trusted partners’ if you fear implementation capability Create an entity to share the responsibility of corralling government stakeholders (regulator, municipalities, communities, environmental agency, national power company, Ministry of energy…) – as they all induce delays in the process Accept successful projects in other countries as ‘proven’ technologies Focus on self-funding, sound projects and let nothing inhibit success

Confidential Financiers and Institutions 6 Financial Institutions ‒ Go hand-in-hand with technology partners which are proven ‒ Push governments to allow time to conclude project finance Regional Development Agencies ‒ Share learnings across regions ‒ Actively promote successful PPP projects across borders Donors ‒ Invest capital on behalf of government in financially viable projects as subordinated debt ‒ Support self-financing initiatives by providing government guarantees World Bank ‒ Support self-financing initiatives by allowing government guarantees

Confidential Case Study: National Electrification Plan 7 Large scale, staged development of 1,500 – 2,000 MW over months Rural Electrification (needed for MDGs) - off-grid capability Subsidise local consumption through PPP joinly using the ‘Robin Hood’ approach: high tariffs to industry (uninterrupted power supply) to subsidise consumers Social Reinvestment: 50% of profits reinvested in government programs to help alleviate concerns about whether the tariff is ‘perfect’ We bring the technology, capability, financing, insurance, scalability, job creation, social investment and desire… …we seek government supporters!