Annual Report 2015

PIDG FACILITIES

 

PIDG Facilities > Early Stage Development

Changing the model for PIDG’s early stage development work

PIDG’s early-stage development Facilities InfraCo Africa and InfraCo Asia provide the funding and expertise needed to turn infrastructure projects in the making into investible opportunities of real interest to the private sector

An insufficient pipeline of bankable projects continues to hinder infrastructure investment in the countries where PIDG works.

This is principally attributable to the higher risks associated with early-stage project development – commercial and regulatory risks; unfamiliarity of local counter parties, counselling caution; capacity constraints in host country government teams – all meaning that private investors can be wary of involvement.

Principally, the InfraCos play where the private sector is unwilling and/or has failed to play.

In 2016 and beyond the InfraCos will work very closely with TAF and DevCo as they scale up their activities, with the aim of meeting and addressing these perceptions of risk head on.

The InfraCos will work jointly with their private sector project developer partners to bring deals to fruition – an approach which has already proved successful in bringing relevant private sector skills and expertise to make projects happen.

Both InfraCos will also look to co-develop projects with Joint Venture Partners in their respective geographic areas that can move through early-stage development, reach financial close and become operational relatively quickly – and that are replicable. Demonstrating the viability of infrastructure projects in PIDG target countries will help encourage other private investors to enter the market.

The InfraCos are both heavily invested in renewable energy projects, much of this on-grid, but they are also actively looking for off-grid projects that will deliver economic development. InfraCo Africa made its first off-grid investment, to a company called Redavia supplying remote locations in Tanzania, in late 2015.