Sonnedix South Africa
This summary describes the proposed MIGA cover for an equity investment of up to US$ 21 million by Okavango Biology Luxembourg, S.a.r.l. into Sonnedix Solar South Africa Holdings Pty Ltd (“Sonnedix”). Currently, Sonnedix is the majority shareholder of Mulilo Sonnedix Prieska PV (RF) Pty Ltd (“MSP”), an existing 75 MW solar project that came forward under the Round 3 of the South African Renewable Energy Independent Power Producer Procurement Program (REIPPPP) in 2013. MIGA coverage is being requested against the risks of Breach of Contract, Expropriation, Transfer Restriction and Inconvertibility, and War & Civil Disturbance for a tenor of up to 15 years.
The 125 hectare grid-connected project site is located 60km South West of the town Prieska, accessible from Cape Town by road and near a small domestic airport. The plant has been operating since its COD on July 2016. The electricity generated from the plant is being sold to Eskom Holdings SOC Ltd, the state-owned public utility in South Africa, under 20-year Power Purchase Agreement (PPA).
The project is classified [category B] under MIGA’s Policy on Environmental and Social Sustainability. Click here to view the Environmental and Social Review Summary.
The project is aligned with the World Bank Group’s South Africa Country Partnership Strategy (“CPS”) FY2022-2026 focus area on “Improving Infrastructure Investment Framework and Selected Infrastructure Services”, and the 2018 Systematic Country Diagnostic (“SCD”) identifies South Africa’s transition away from coal as one of the country’s top five priorities. Although South Africa has remained heavily dependent on coal, the government aims to achieve over 20 GW of renewable energy by 2030. By providing clean, renewable, and low-cost electricity in the country, this Project has been supporting the diversification of South Africa’s energy mix. Moreover, MIGA’s cover for this investment will allow positive development benefit by mobilizing a foreign sponsor with extensive operational management expertise in the power sector. The acquisition of the plant also demonstrates value for renewable power players in the secondary market, and has the potential to catalyze more investments in the renewable power sector.