Globeleq completes ZAR 5.2bn refinancing for 238 MW in South Africa

Globeleq has announced the completion of a ZAR 5.2 billion debt financing package for three of its renewable energy facilities in South Africa: the 138 MW Jeffreys Bay Wind Farm, and the 50 MW De Aar Solar and 50 MW Droogfontein Solar plants.

The transaction falls under the Department of Mineral Resources and Energy’s (DMRE) Independent Power Producer Office (IPPO) Refinancing Protocol initiated in June 2020. The initiative works on a voluntary basis and targets IPPs from Bid Windows 1 to 3.5 of South Africa’s Renewable Energy Independent Power Procurement Programme (REIPPP). The initiative can include a wide range of options such as maintaining existing debt levels and structure but reducing margins; increasing existing debt levels; increasing debt tenor; converting Johannesburg Interbank Average Rate debt to Consumer Price Index debt; replacing reserve accounts with contingent facilities; replacing junior debt with senior debt introducing preference shares; and restructuring existing risk management strategy and hedging policies. Its end goal is to contribute to the lowering of the wholesale price of electricity.

It had already resulting in South Africa’s largest infrastructure deal when the 50 MW Bokpoort CSP plant completed its refinancing in late 2020. The transaction had then created more favourable debt terms and effectively reduced the project’s cost of capital.

Globeleq’s projects refinancing is the second transaction to be executed under the protocol. New financing structures effectively unlock reduced tariff to Eskom, which in turn directly impacts the cost of electricity for South African consumers. Globeleq’s refinancing operation, for which Absa acted as the mandated lead arranger and sole underwriter, will save ESKOM ZAR 1 billion in tariff reductions across the three assets over the remaining 12-year term of the power purchase agreements (PPAs).

Details on REIPPP projects from Window 1 to 4 are available in the “Projects” section within your Hawilti+ research terminal.

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