Legal aspects to take into account for small hydropower projects in Africa

Transcription

1 Legal aspects to take into account for small hydropower projects in Africa 1st Africa Small Hydropower Forum Salzburg, 29 November

2 About us Becker Büttner Held has been operating since At BBH, lawyers, auditors and tax advisors work hand in hand with the engineers, consultants and other experts of our BBH Consulting AG. We provide advice to more than 3,000 clients and are the leading law firm for the energy and infrastructure industry. BBH is known as the law firm of public utilities. But we are far more than that in Germany and also in Europe. The decentralised utilities, the industry, transport companies, investors as well as political bodies, like the European Commission, the Federal Government, the Federal States and public corporations appreciate BBH s work. Accredited professionals: ca. 250; total staff: ca. 550 Offices in Berlin, Munich, Cologne, Hamburg, Stuttgart, Erfurt and Brussels 2

3 Dr. Dörte Fouquet Dr. Dörte Fouquet is specialized in EU law and international legal relations, with focus on competition, infrastructure, energy and environment. She is legal advisor to companies, finance institutions, associations, governmental agencies in Germany and other EU Member States, EU institutions and on international level. Studies of Law at the Universities of Marburg and Hamburg 1982 Research assistant, University of Hamburg 1988 Ministry for the Environment and Energy, Hamburg 1991 Liaison office of Hamburg and Schleswig-Holstein to the European Commission in Brussels 1993 Partner at law firm Kuhbier, Brussels Since 2011 Partner at BBH Brussels Rechtsanwältin / Lawyer Partner 1000 Brussels, Belgium Avenue Marnix 28 Phone +32 (0) doerte.fouquet@bbh-online.be 3

4 Agenda 1. Overview of the legal framework 2. Examples of funding programmes 3. Investment protection agreements 4. Importance of PPA structure 5. BBH experience in Africa 4

5 Agenda 1. Overview of the legal framework 2. Examples of funding programmes 3. Investment protection agreements 4. Importance of PPA structure 5. BBH experience in Africa 5

6 Risk for small hydropower projects 4 significant hurdles Legal framework Financing Entrepreneurship Technology, organization and logistics 6

7 Legal framework for small hydropower projects Investment agreement with host State Additional securities Small hydropower project Agreements with local project partners Project financing 7

8 Overview: legal framework for small hydropower investments in Africa At first glance: favourable conditions for investments in small hydropower projects Some countries have mandatory overall targets for renewables/ binding targets for reducing greenhouse gas emissions opening up of the market to competition and regulation of infrastructure services Positive development of licensing procedures (duration, burden, predictability and transparency) Top 3 Ranking according to Climatescope 2016: Rwanda, Kenya and Cameroon But: Risks remain high - financing conditions are therefore usually unattractive 8

9 Agenda 1. Overview of the legal framework 2. Examples of funding programmes 3. Investment protection agreements 4. Importance of PPA structure 5. BBH experience in Africa 9

10 Examples of funding programmes Local support schemes Tax incentives FiT and auctions Access to finance Germany, EU and international initiatives For small and large scale projects (ex: GET FIT-Programme with Kreditanstalt für Wiederaufbau (from 1 to 20 MW), Africa Renewable Energy Fund (from 5 to 50 MW) or Scaling Solar Programme (100MW 500 MW)) Investment guarantees to cover political risks from the German federal government (Euler Hermes guarantees) or from the World Bank (Partial Risk Guarantee) Local or other support programmes For ex. Africa EU Renewable Energy Cooperation Programme (RECP) 10

11 Agenda 1. Overview of the legal framework 2. Examples of funding programmes 3. Investment protection agreements 4. Importance of PPA structure 5. BBH experience in Africa 11

12 Legal protection through investment protection agreements No multilateral agreement with African States and the EU (like Energy Charter Treaty) Energy Charter Treaty from 2015 (that has been signed by many African States) is only a memorandum of understanding no legal position is granted to investors But Germany has Bilateral Investment Treaties (BIT) with many African States ex: Algeria, Chad, Burkina Faso, Rwanda, Kenya etc. South Africa started in 2015, to cancel its BITs (including the BIT with Germany); investment protection should be granted by national law 12

13 Benefits from investment protection agreements Binding legal position for the investors to protect against political and regulatory risks Protection against expropriation and unfair treatment Protection against discrimination Protection of the rule of law As a last resort host State can be sued for damages (protection through secondary legislation) Thus: it is important to consider whether and which agreements have been undertaken by the host State However: only basic protection against State intervention 13

14 Agenda 1. Overview of the legal framework 2. Examples of funding programmes 3. Investment protection agreements 4. Importance of PPA structure 5. BBH experience in Africa 14

15 Importance of PPA structure How long should the PPA be for? PPA must exceed the term of the loan Price determination? FiT vs competitive tender (FiT allow market access for newer and smaller power producers) Energy price structure? Tariff calculations must be clear and well defined for the length of the contract. Adjustment mechanisms should take into account the particularities of the local situation Risk management? Important to identify the risks and allocate each risk to the party that is the most capable of managing it How should dispute be settled? Best practice is offshore arbitration under internationally-accepted rules (ICC, SCC etc.). Important risk of bias if settled by national bodies. Termination of the PPA? Should be limited to significant events 15

16 Agenda 1. Overview of the legal framework 2. Examples of funding programmes 3. Investment protection agreements 4. Importance of PPA structure 5. BBH experience in Africa 16

17 BBH experience in Africa Med-EMIP : EU-sponsored programme. Introduction of common rules and regulations on investment for energy infrastructure of common interest (in particular, strengthening the link between southern Spain and Morocco). Morocco: programme sponsored by Germany (GIZ). Legal framework and opportunities for the development of a joint solar energy project (solar thermal power plants) between Morocco, Germany, France and Spain in particular to export the generated electricity and to fulfil the national overall targets for Tunisia: programme sponsored by Germany (GIZ) for the Tunisian State to develop the electricity market regulation Advising companies on the promotion of RE in Africa and the national framework for RE project development (MENA Region, Kenya ) 17

18 Thank you very much for your attention. Dr. Dörte Fouquet, BBH Brüssels Tel +32 (0)