FAQs
What specific risks are covered?
The risks covered under AEGF-backed insurance policies, as specified by the client, fall under traditional Political Risk Insurance (PRI), i.e. Confiscation, Expropriation, Nationalization and Deprivation; Transfer Restrictions and Currency Inconvertibility; War and Civil Disturbance) or extended PRI, i.e. a combination of traditional PRI and Breach of Contract/Arbitral Award Cover. AEGF-backed insurance policies can be tailored to cover a specific risk or combination of risks or power purchase agreement (PPA) clauses.
Last update on 2021 Jan 13 by L+L Administrator User.
What are the eligibility criteria?
The African Energy Guarantee Facility (AEGF) supports green energy projects that adhere to the European Union’s environmental and social standards and procurement guidelines and are aligned with Sustainable Energy for All (SEforALL) principles.
Such projects may involve energy access, energy efficiency or renewable energy for the purposes of energy generation, transmission or distribution – or any combination thereof.
AEGF-backed insurance solutions are available in Benin, Burundi, Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, South Sudan, Tanzania, Togo, Uganda, Zambia, Zimbabwe. Projects in other countries will be considered on a case by case basis.
Last update on 2022 Oct 13 by L+L Administrator User.
How is AEGF-backed insurance priced?
Indicative pricing based on project type, scope, duration and risk(s) is provided by the primary insurer within 1 to 3 days of receipt of project information. At this stage, the primary insurer will also advise of the project’s eligibility for cover and the insurance capacity available should the project require considerable insurance support. Insurance premiums are priced competitively and reflect commercial best practices.
Last update on 2021 Jan 12 by L+L Administrator User.
What is the application process and how long does it take?
Investors, lenders, project sponsors or developers who wish to obtain AEGF-backed insurance for green energy projects should contact Thomas Mahl or Franz Karmann on the AEGF team.
Be sure to provide a description of the project, i.e. scope, contractual structure, financing parties, type of cover required, etc). You will know within a few days if AEGF-backed insurance is available and what the estimated premium cost will be.
As a next step you will be asked to provide additional details so the primary insurer can commence the due diligence process, such as contracts with project counterparties, government support documentation if applicable, ESIA reports, financial model, etc.
Due diligence and subsequent approval will take approximately 4 to 6 weeks.
Last update on 2021 Jan 13 by L+L Administrator User.
What happens if there is a claim?
In case of a claim regarding a risk or risks covered under an AEGF-backed insurance policy, the insured will be notified of the insurer’s [ATI’s] liability to pay an indemnity for a loss no later than 60 days either from the end of the applicable Waiting Period for each Covered Risk, or from the date that the Insurer deems the Insured's Claim to be complete, whichever comes later. Thereafter, ATI will remit payment within 30 days.
Note: A Waiting Period of 180 days (365 days for breach of contract/arbitral award cover) may be applied to explore all available avenues of resolution. Claim is deemed complete when the Insurer [ATI] is satisfied that it has received all of the material evidence required by the Insurer to prove loss and to determine the Insured's right to indemnity under the Policy.
Last update on 2021 Apr 30 by L+L Administrator User.
How long does it take before a claim is settled?
Once the Waiting Period (180 days for most claims, 365 days for claims related to Breach of Contract/Arbitral Award insurance cover) has lapsed, settlement is made within 30 days. Where cover provided is for an amortization facility, the settlement will match the scheduled repayments under the debt facility which have been made (i.e. actual defaults) following breach of a covered peril.
Last update on 2021 Apr 30 by L+L Administrator User.
Who carries the risk in case of government non-payment?
In case of non-payment by the government (or a government-owned power utility), the stakeholders under the African Energy Guarantee Facility will be guided by the project documents entered into between the government and the project.
In most cases, project agreements provide for contract termination following protracted payment default by the government or the government-owned power utility. Payment defaults on the part of the government under the project agreements (e.g. a Letter of Support, Government Guarantee, Concession Agreement) may be covered under the Breach of Contract peril. A claim can be settled under the facility when an Arbitral Award is given in favor of the project but not honored by the government.
There is no “fronting” of the risk as the cover is underwritten by the primary insurer, MunichRe and the Guarantors. Fronting can be considered on an exceptional basis when the primary insurer is unable to retain any risk on its books.
Last update on 2021 Jan 12 by L+L Administrator User.
Is there a limit to the reinsurance capacity?
Reinsurance capacity limits may apply to specific projects and for specific countries. In the event that the insurance cover required goes beyond the capacity available under the Africa Energy Guarantee Facility (AEGF), the AEGF stakeholders may make an exception and raise the limit. If required, additional reinsurers may be called upon to provide additional capacity.
Last update on 2021 Jan 12 by L+L Administrator User.
Is currency convertibility risk covered?
Yes, AEGF-backed insurance is available to cover the risk of currency inconvertibility.
Last update on 2021 Jan 12 by L+L Administrator User.
Is the dollar amount required for convertibility covered?
AEGF-backed currency inconvertibility insurance may cover loan repayments which cannot be converted into hard currency following receipt of a payment in local currency. Where the insurance cover provided is for the equity in the project, AEGF-backed insurance for currency Inconvertibility will cover dividend repayments when due or the full equity following a termination payout received from the government in local currency.
Last update on 2021 Jan 12 by L+L Administrator User.
How does AEGF-backed insurance compare in terms of pricing?
Insurance products backed by the African Energy Facility Guarantee are priced competitively and reflect commercial best practices. Because they can be tailored to match a project's specific risk profile and adapted to the extended timelines common in green energy development, AEGF-backed insurance not only are often very competitive to begin with but also prove more cost-effective over the long term.
Last update on 2021 Jan 12 by L+L Administrator User.
In which countries is AEGF-backed insurance available?
AEGF-backed insurance solutions are available in Benin, Burundi, Côte d’Ivoire, Democratic Republic of Congo, Ethiopia, Ghana, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, South Sudan, Tanzania, Togo, Uganda, Zambia, Zimbabwe.
Projects in other countries will be considered on a case by case basis.
Last update on 2021 May 18 by L+L Administrator User.
What are the payment terms for insurance premiums?
Premiums for AEGF-backed insurance products can be paid annually or in monthly installments.
Last update on 2021 Jan 12 by L+L Administrator User.
Is there a limit to project size or scope?
There is no limitation to project size or scope, provided the project adheres to the European Union’s environmental and social standards and procurement guidelines and is aligned with Sustainable Energy for All (SEforALL) principles. For additional information on eligibility criteria.
Last update on 2021 Jan 13 by L+L Administrator User.