PIDG Technical Assistance (PIDG TA)
The PIDG TA Team manages grant funding to support PIDG Companies’ activities, to meet a range of needs associated with the infrastructure project development cycle, including the assessment of potential investment opportunities and building capacity of host country partners and local investors. PIDG TA can also make up-front capital grants at financial close, through Viability Gap Funding (VGF), to support the construction phase of projects providing strong development impact. This funding is designed to reduce the costs of infrastructure projects to make economically viable projects financially viable in order to attract private finance.
PIDG TA also plays a central role to enable PIDG to initiate multi-company programmes and initiatives that are not specific to a particular company, and which align with PIDG strategic objectives. PIDG TA funding is almost exclusively deployed though the PIDG Companies.
TA Funding
Projects
InfraCredit – Nigeria
This project unlocked the potential in infrastructure financing in Nigeria.
GuarantCo provided a Callable Funding Facility of $50m
PIDG TA provided $1.2m in grants to cover feasibility costs and capital raising costs.
Challenge
- Investment by Nigeria’s pension funds in infrastructure-linked bonds has been constrained by lack of precedents and insufficient credit quality to satisfy investors.
TA Solution
- A TA grant of USD178,000 was provided to GuarantCo to cover the costs of just over half of a feasibility study for the establishment of a credit enhancement facility in Nigeria.
- A TA grant of US$900,000 be made available to GuarantCo to cover approximately half of the seed capital required for setting up InfraCredit in partnership with NSIA.
Impact
- Since it was established, InfraCredit Nigeria has successfully issued its first guarantee supporting a ten-year NGN10bn corporate infrastructure bond, as well as its first 15-year corporate infrastructure green bond.
Kikagati Hydro-electric Plant – Uganda/Tanzania
This project will help provide clean, renewable energy for Uganda and Tanzania.
EAIF provide $27m in debt finance over 16 years
PIDG TA provide $795k in an early stage project development grant
Challenge
- Costs unexpectedly increased as a result of prolonged negotiations on several project documents (some due to the cross-border nature of the project), resulting in high legal costs as well as technical complications with the project design.
TA Solution
- Two TA grants totaling USD 795,000 to assist the project sponsors with higher than anticipated technical and legal analysis and advisory costs given the specific circumstances of the (Bugoye) refinancing and the greenfield financing (Kikagati).
Impact
- The impact of these TA activities was that Kikagati was able to reach financial close due to the support provide to cover the high level of due diligence costs to the lenders and sponsors.
Coc San run-of-river hydro - Vietnam
Development of a 30 MW run-of-river hydropower project
InfraCo Asia Investments invested $10m at financial close
PIDG TA provided $5m in viability gap funding
Challenge
- The project was not viable because the wholesale tariff was too low to cover the project costs.
- Initial capital was expended & the project company was unsuccessful in securing long-term debt financing. Early work in the project stalled in 2011.
- Despite increased efficiencies and cost reductions attributable to InfraCo Asia’s involvement, the project remained financially unviable.
TA Solution
- Evaluation of the need for a VGF grant was undertaken and reviewed by the Panel of Experts.
- It was agreed that USD 5m of VGF would be provided to the project to help the project reach financial close.
Impact
- Successfully took it to financial close and then completed construction to international standards
- 130,000 people with new or improved access to sustainable power
- 87,000 people benefit from reliable power supply
- 76,000 tons reduction in carbon emissions p.a.
Kigali Bulk Water - Rwanda
Creating replicable model for PPP - securing complex financing to deliver water supply project
EAIF lead arranger $40m 18-year loan jointly with AfDB
PIDG TA provide $6.25m in viability gap funding
Challenge
- Untested regulatory framework
- Lack of availability of long term debt
- Tariff affordability
- Uncertainties with respect to governance framework
TA Solution
- DevCo enabled the development of a PPP transaction
- Evaluation of the need for a VGF grant was undertaken and reviewed by the Panel of Experts.
- It was agreed that USD 5m of VGF would be provided to the project to help the project reach financial close.
Impact
- The project revealed the viability of private-financed water treatment plants in SSA
- Connecting 500,00 people in Kigali, Rwanda with reliable water supply
- Early-stage structuring and innovative blended finance creates a benchmark for future transactions
Green Affordable Housing – Timor Leste
Transaction Advisory for a Green Affordable Housing PPP
PIDG TA provided $918k in upstream project assessment and transaction advisory services
Challenge
- Timor Leste has a rapidly-growing population that requires access to affordable housing.
- The government of Timor Leste required support to run a full public tendering programme.
TA Solution
- Via DevCo, PIDG TA provided a $100k grant to outline a business case for a green housing PPP in Timor Leste.
- Upstream assistance was provided with an assessment of the site suitability, assessment of E&S issues and regulatory requirements
- Full transaction advisory services where provided to the government of Timor Leste with a $818k grant to DevCo.
Impact
- The IFC is currently in the process of developing a full tendering programme for an affordable housing PPP.
- The IFC has agreed with the Timor Leste Government to ensure that the affordable housing will be developed in such as a way as to ensure EDGE certification.
Key facts
TA grants were approved in 2019
Pipeline of TA grants for 2020 with a focus on pre-feasibility studies and capacity building
committed to TA grants in 2019
committed overall to 191 TA grants
