Africa: Financial Turmoil Hits Energy Projects

The turmoil in global financial markets has slowed down the participation of international lenders in energy projects in Africa, a South African legal expert said yesterday.

The trend is likely to perpetuate the lack of investment in energy infrastructure in Africa.
According to the South African National Energy Association (Sanea) , only one third of the African population has access to modern energy. Access to electricity is estimated at 34%, and only 5% in rural areas, Sanea said.

Brigette Baillie, a partner at law firm Webber Wentzel, told an energy conference in Johannesburg yesterday that, as a result of the turmoil in financial markets, “international lender participation in deals in Africa and other emerging markets is now somewhat limited”.

“When an international institution is prepared to participate in financing in Africa, these institutions are particularly selective as to the transactions in respect of which they are prepared to participate.

“The evidence and growing trend in the current debt market is that borrowers are having to accept higher pricing and stricter terms in order to get their deals done. I do not think that we have seen the bottom of the tightening of debt terms yet”.

AllAfrica